Inflation measurement sits at the core of modern macroeconomics. Interest-rate policy, asset valuations, fiscal planning, and central-bank credibility all hinge on how price pressures evolve. Yet the benchmark most policymakers rely on — the Consumer Price Index (CPI) — is a monthly government report designed for a far less digitized and fast-moving economy.
Increasingly, market participants are supplementing that traditional gauge with real-time alternatives. Among them, Truflation has emerged as the most widely cited live inflation index. Built from millions of observed prices and updated continuously, it offers a near real-time snapshot of price dynamics. In early 2026, its signal diverges meaningfully from official CPI data.
Methodology and Structural Differences
Truflation was launched in December 2021 amid frustration over the lag in official inflation reporting. While CPI is released monthly and relies heavily on surveys, sampling, and statistical smoothing, Truflation applies a bottom-up, digitally native methodology.
The index aggregates data from more than 30 million items across 30+ licensed providers — including online retailers, housing platforms, and consumer-data firms. Prices update daily and are secured through decentralized oracle infrastructure on the Chainlink network, increasing transparency and reducing the risk of retrospective revisions.
Like CPI, Truflation tracks twelve broad consumption categories. However, its category weights are recalibrated annually using observed spending patterns rather than fixed survey-based assumptions. This allows the index to adjust more quickly to shifts in consumer behavior and pricing trends.
Historically, that responsiveness has mattered. Empirical comparisons suggest Truflation has often led CPI turning points by roughly 40 to 75 days, flagging inflection points in inflation momentum well before they appear in official releases.
Institutional Validation
Skepticism toward alternative measures is natural. Still, Truflation has begun clearing some of the credibility hurdles required for broader institutional adoption.
Throughout 2024 and 2025, its short-term forecasting accuracy was notable. In many instances, its readings anticipated CPI outcomes within approximately ±0.1 percentage points. That degree of precision has encouraged growing usage among macro hedge funds and systematic trading strategies.
Institutional validation advanced further in early 2026 when Truflation was integrated into the Bloomberg L.P. terminal ecosystem — a quiet but meaningful step that elevated it from a crypto-native experiment into a recognized macro data input.
Transparency also strengthens its appeal. Daily updates, publicly documented methodology, and auditability offer advantages in markets that reprice continuously, where a 30-day lag can materially affect positioning.
The 2026 Divergence
By mid-February 2026, the spread between Truflation and official CPI readings had widened to one of the largest gaps since the index was created:
Official CPI (January 2026): 2.4% year-over-year
Truflation (Feb 1–18, 2026): ~0.7%
Core CPI: ~2.5%
Truflation core proxy: ~1.3%
Such a divergence presents a challenge: either real-time data are signaling a rapid disinflationary shift not yet captured by government statistics, or the high-frequency approach is temporarily underestimating sticky components embedded in CPI.
If historical lead times hold, markets may need to reassess the inflation trajectory sooner rather than later.
The widening gap between the two measures points to fundamentally different interpretations of current inflation momentum. The central source of divergence is housing.
Truflation incorporates real-time asking rents pulled from active market platforms, capturing the recent cooling in rental prices as it happens. By contrast, official CPI relies heavily on “Owner’s Equivalent Rent,” a survey-based estimate that typically lags actual rental-market conditions by six to twelve months.
In effect, the two gauges are measuring different time horizons. Truflation reflects present housing dynamics, while CPI still embeds rental trends from prior quarters.
The macro implications are significant. If the real-time signal is more accurate, the U.S. economy could be moving closer to disinflation — or even deflationary — conditions, historically associated with rising recession risk. Meanwhile, official data continue to portray a controlled soft landing, with inflation appearing comfortably near target.
Explaining the Reluctance
Despite its growing track record, many economists remain hesitant to incorporate Truflation into formal macro frameworks. The resistance tends to rest on three main arguments.
1. Institutional inertia. CPI has decades of embedded usage. Forecasting models, policy rules, asset-allocation frameworks, and academic research are all synchronized to its monthly release cycle. Integrating a daily inflation measure would require reworking not only projections, but established institutional workflows.
2. Volatility bias. Because Truflation updates continuously, it can display sharp short-term swings. A rapid daily decline may be dismissed as noise, even when it reflects genuine pricing shifts. By comparison, CPI’s smoothed profile feels more stable — even if that stability comes at the expense of timeliness.
3. Composition differences. Truflation assigns slightly less weight to housing than CPI. Critics argue this could understate inflation during periods of accelerating rents. Yet the reverse also holds true: when rental markets cool quickly, CPI may overstate underlying price pressure — which appears to be the present dynamic.
Ultimately, the hesitation is less about data availability and more about comfort. A measure that moves faster and smooths less inevitably challenges established interpretive habits.
Conclusion: Why the Signal Matters
If Truflation’s current reading is directionally correct, monetary-policy expectations could be misaligned with underlying inflation trends. The Federal Reserve may have greater scope to ease than prevailing consensus assumes, even as headline data suggest economic resilience.
This does not mean Truflation should replace CPI as the official benchmark. But when divergences persist and widen, dismissing the alternative becomes increasingly difficult.
More broadly, the debate underscores a structural issue: inflation cannot be treated solely as a once-a-month statistic in an economy where prices adjust continuously. Measurement tools must evolve alongside market speed.
Truflation’s importance does not rest on perfection. Its value lies in timeliness, transparency, and the growing challenge of ignoring what it is signaling.
The global energy industry is preparing for its most serious upheaval since the 2022 invasion of Ukraine. As tensions in Iran intensify, the Strait of Hormuz — the world’s most vital transit route for liquefied natural gas (LNG) — has effectively come to a standstill.
Vessel-tracking data shows that at least 11 large LNG carriers have suspended their journeys. Major Japanese shipping firms, including Nippon Yusen K.K. (TYO:9101) and Mitsui OSK Lines Ltd (OTC:MSLOY), have reportedly instructed their ships to remain in safer waters. Iranian state media has characterized the passage as “virtually closed,” leaving roughly 20% of global LNG supply stranded behind what amounts to a naval blockade. Unlike oil, which can sometimes be diverted through pipelines, the immense volumes of Qatari gas moving through this narrow corridor have no viable alternative route.
Asia’s exposure and price shock
Asian nations are at the forefront of the fallout. Buyers in China, India, and Japan — the largest importers of Qatari gas — are said to be urgently seeking substitute cargoes from other suppliers. Yet in an already tight market, traders expect a sharp surge in spot LNG prices, potentially undoing a year of relative price stability within days.
The strain extends beyond spot purchases. Many long-term LNG agreements are linked to crude benchmarks, so any spike in Brent Crude would quickly drive up costs even for contracted volumes, raising energy bills for households and industrial users alike.
Supply risks and broader regional strain
The disruption is also creating operational risks for producers. LNG export terminals depend on a continuous rotation of tankers to maintain cooling systems; without outbound shipments, producers in Qatar and the UAE could face partial or full production shutdowns.
The ripple effects are spreading beyond the Gulf. With Israeli gas fields closed and Iranian pipeline exports to Turkey under pressure, countries such as Egypt are being pushed into the higher-cost seaborne LNG market.
The result is a global scramble for the limited cargoes still available, setting the stage for an international bidding war. Whether the conflict widens or remains contained, the financial burden is likely to be passed on to consumers around the world.
The United States and Israel carried out coordinated strikes on Iran on Saturday, killing Supreme Leader Ali Khamenei and triggering a fresh wave of conflict across the Middle East.
The attacks unsettled neighboring Gulf Arab oil producers as concerns mounted over further escalation, particularly after Iran retaliated with missile launches toward Israel.
According to four trading sources, several major oil companies and leading commodity traders temporarily halted crude and fuel shipments through the Strait of Hormuz following the strikes.
Key Reactions from Analysts
Helima Croft, Head of Commodities Research, RBC Capital:
Croft said the long-term impact on oil prices will depend on whether the IRGC retreats under sustained airstrikes or escalates further, potentially increasing the costs of what she described as Washington’s second regime-change effort in just over two months.
She added that regional leaders had cautioned Washington about the spillover risks of renewed confrontation with Iran, warning that oil prices above $100 per barrel would pose a serious threat.
Croft also emphasized that OPEC’s ability to cushion supply shocks is limited. Aside from Saudi Arabia, most OPEC+ members are already producing near capacity, meaning any announced output increase may have little practical effect.
Jorge Leon, SVP and Head of Geopolitical Analysis, Rystad Energy:
Leon noted that while alternative infrastructure exists to bypass the Strait of Hormuz, a prolonged disruption could effectively remove 8–10 million barrels per day from the market—significant in a world consuming roughly 100 million barrels daily.
He suggested countries with strategic petroleum reserves may release supplies if the disruption drags on. Absent quick de-escalation, he expects oil prices to reprice sharply higher at the start of the week.
Eurasia Group energy analysts:
They anticipate oil prices will surge when markets reopen. If fighting continues into Sunday, prices could jump $5–$10 above the current $73 level, especially given Iran’s claim that it has closed the Strait of Hormuz and reports of tanker disruptions.
Barclays energy analysts:
Barclays warned that markets may confront worst-case supply fears on Monday. Brent crude could climb to $100 per barrel as traders assess the risk of major supply interruptions amid intensifying regional instability.
Vishnu Varathan, Head of Macro Research (Asia ex-Japan), Mizuho, Singapore:
Varathan said recurring regional attacks may become the new norm, keeping oil prices elevated as both production and transit routes remain vulnerable. OPEC could face pressure to boost output, though a 10–25% risk premium on oil prices would not be excessive—even without a full blockade of the Strait of Hormuz, which he described as a potential 50% premium event.
Christopher Wong, Strategist, OCBC, Singapore:
Wong expects geopolitical risk premiums to rise as markets open. Safe-haven assets like gold are likely to gap higher, while oil could strengthen on supply concerns. Meanwhile, risk assets and high-beta currencies may experience early volatility, particularly if retaliation or regional spillover intensifies.
Nick Ferres, CIO, Vantage Point Asset Management, Singapore:
Ferres argued that energy remains undervalued and should rally at the start of the week—alongside gold.
Thunderous explosions and massive fireballs from missiles launched by Iran across the Gulf underscored a long-feared reality for regional leaders: Tehran can carry the fight directly to their territory. The attacks are likely to solidify Arab governments’ backing for joint action by the United States and Israel.
Even on the Palm Jumeirah — Dubai’s most exclusive enclave — blasts shook buildings and struck a luxury hotel, sending residents scrambling as missiles and interceptors streaked overhead. The scenes made clear that the conflict had spilled beyond Iran’s borders, just as Tehran had cautioned.
“What has now been demonstrated is that we — not the United States — are directly exposed,” said Ebtesam Al-Ketbi of the Emirates Policy Center. “When Iran attacked, it hit the Gulf first, claiming it was targeting U.S. bases.”
Analysts say Tehran’s strikes are designed to show that no American ally in the region is out of reach and to increase the price of supporting Washington’s campaign. But they warn that any error in judgment could turn calibrated signaling into full-scale war.
Gulf officials argue that by hitting oil-producing neighbors, Iran is widening the battlefield and putting global energy supplies at risk, not merely regional stability. For rapidly expanding economies such as Saudi Arabia, Qatar and the United Arab Emirates — all reliant on open skies, safe sea lanes and steady trade — a broader confrontation would be severely destabilizing.
By casting the confrontation as a campaign for regime change in Iran, President Donald Trump has raised the stakes, increasing the likelihood that Tehran could retaliate more aggressively, observers say.
If Iran were to misjudge and directly attack Gulf Cooperation Council states, the nature of the conflict would shift dramatically. Regional governments would be under intense pressure to respond as lives and strategic assets come under threat.
Some Gulf analysts contend that Iran is undermining its own strategic interests by striking neighboring states. While Tehran insists it is targeting U.S. military installations, Gulf capitals view the attacks as clear violations of sovereignty.
In recent indirect talks with Washington aimed at defusing tensions, Iran signaled willingness to negotiate over its nuclear program but refused to discuss its ballistic missile arsenal or its backing of regional militias. Tehran has suggested that such issues be handled in a regional dialogue excluding the United States — a proposal Gulf states argue would weaken rather than strengthen the existing security framework, given their longstanding reliance on U.S. protection.
From their perspective, Iran’s missile capabilities and network of proxies pose immediate threats. Without external security guarantors, they see little credibility in a regional-only arrangement.
Meanwhile, Trump’s rhetoric has shifted notably. Whereas he previously described potential U.S. strikes as leverage to secure a nuclear agreement, he has more recently framed them in terms that imply regime change. Unlike the large-scale 2003 invasion of Iraq under George W. Bush, which involved a prolonged troop deployment and occupation, the current strategy appears focused on limited air operations designed to achieve swift, visible outcomes while minimizing American casualties and domestic political fallout.
The bet is that a short, decisive campaign would yield political benefits, whereas a drawn-out war — especially one disrupting oil flows or the broader economy — could carry heavy costs.
Should the conflict expand to include U.S. bases, diplomatic missions, energy infrastructure, or the crucial maritime corridor of the Strait of Hormuz, the economic and political repercussions for the United States, the Gulf, and global markets would escalate sharply.
In a post on Truth Social, Donald Trump warned Iran not to carry out any additional retaliatory strikes against the United States or its Middle East allies. He said Tehran had threatened large-scale attacks on neighboring countries seen as aligned with Washington.
The remarks suggest that Iran’s military capabilities remain operational despite the reported killing of its Supreme Leader, Ali Khamenei. The wave of retaliatory strikes indicates that Tehran has not been deterred by his death.
Iran reportedly targeted the United Arab Emirates, striking Dubai International Airport and the Burj Khalifa, the world’s tallest building. It also launched attacks on Bahrain’s capital, as well as Qatar and Kuwait. In response, several Gulf states have warned they may retaliate against Iran.
Qatar has shut down its main airport in Doha, while Dubai International Airport has also been closed following the strikes.
It remains uncertain whether Trump’s threat to respond with significantly greater force will deter further escalation. It is also unclear what he meant by saying, “We will hit them with a force that has never been seen before.”
Impact of the Conflict on Global Trade and the Energy Sector
Earlier today, we noted that the sudden closure of Dubai International Airport caused widespread flight cancellations due to its vital role as a global transit hub. Leading Gulf airlines — Emirates, Qatar Airways, and Etihad Airways — have suspended services indefinitely.
In addition, three major Japanese shipping companies have halted operations in the Gulf following a U.S. naval warning. These include Nippon Yusen (TYO:9101), Mitsui O.S.K. Lines (OTC:MSLOY), and Kawasaki Kisen Kaisha (TYO:9107).
Analysts at RBC Capital Markets say that U.S. strikes on Iran and Tehran’s counterattacks have created a cascading effect across the Gulf. The Strait of Hormuz is now viewed as “effectively closed,” disrupting roughly 20% of global LNG exports and about 90% of Japan’s crude oil imports.
They warn that crude oil prices could spike sharply as tensions intensify and diplomatic efforts remain stalled. Investors are advised to closely track developments in the region and assess their potential implications for oil and LNG markets.
UK markets return to the spotlight on Friday following Labour’s surprise defeat in the Gorton and Denton by-election. Labour’s candidate finished third, while the Greens secured a commanding win over both Labour and Reform. Investors in gilts and sterling must now assess the longer-term implications of the result — including whether it signals growing traction for the radical left within UK politics — and what it could mean for Keir Starmer’s leadership.
Sterling initially strengthened earlier this morning but has since slipped to fresh lows, testing $1.3450. It is currently the weakest performer in the G10 on Friday and the second weakest over the week. Despite heightened political uncertainty, the decline in the pound has been relatively contained so far. Notably, gilts outperformed on Thursday, with yields falling sharply.
Why Starmer may remain secure — for now
Earlier this month, speculation that Starmer could face an internal challenge sparked some volatility in the gilt market. However, that uncertainty faded quickly after senior cabinet members publicly backed him. Although calls for his resignation may intensify within parts of the party, we do not expect Labour heavyweights or cabinet members to support such moves.
It seems unlikely that Starmer would be ousted on the back of this result alone. Few potential rivals would want to assume leadership ahead of next week’s Spring Statement. Moreover, possible successors such as Wes Streeting and Angela Rayner face their own challenges — Streeting could encounter a Green surge in his constituency, while Rayner continues to contend with questions surrounding the stamp duty issue. Cabinet members have already cautioned against overinterpreting the by-election outcome, suggesting Starmer’s position is stable for the time being.
Why a leftward shift may not help Labour
Some within Labour may argue for a sharper move to the left in response to this defeat. However, Gorton and Denton represents just one constituency and is not necessarily indicative of national sentiment. It is far from clear that adopting more left-leaning policies would strengthen Labour’s prospects in the May elections. According to recent YouGov data, the economy remains voters’ primary concern, and more progressive policies may do little to address rising unemployment, particularly among younger people.
Why gilt volatility may remain contained
Although the by-election presents a political test for the gilt market, it is unlikely to trigger significant volatility at week’s end. The broader impact of the May election results is likely to matter more. Additionally, there is speculation that next week’s Spring Statement could see the Office for Budget Responsibility reduce its forecast for gilt issuance this year, following strong tax receipts earlier in the year. That could help ease upward pressure on yields and offset any market reaction to Labour’s loss.
Technical focus: GBP/USD
Sterling is broadly weaker today, though the by-election result has not sparked a full-scale sell-off. GBP/USD is hovering around its 200-day simple moving average at $1.3447. A decisive break below this level would represent a significant technical deterioration and suggest downside momentum is building.
Netflix rallies after abandoning Warner Bros Discovery bid
European equity futures point to a firmer open on Friday, capping another week in which European indices are set to outperform US markets. Netflix is in focus after confirming it has withdrawn its bid for Warner Bros Discovery. The stock jumped 8% in post-market trading on Thursday and could recover much, if not all, of its roughly 10% year-to-date decline.
Investors will also monitor European inflation data, with attention on France to see whether CPI rebounds following a sharp drop earlier in the year.
Most Asian currencies slipped on Friday as investors weighed a mixed interest rate outlook across the region. The Australian dollar was on track for a solid monthly gain, while the Japanese yen remained under pressure.
The Chinese yuan declined after Beijing lowered a key reserve requirement to make dollar purchases cheaper domestically, though the currency continued to hover near three-year highs.
Meanwhile, the dollar index and dollar index futures edged down about 0.1% in Asian trading. Despite the dip, the greenback was up 0.7% for February, supported by safe-haven demand and lingering uncertainty over the direction of interest rates.
Japanese yen subdued after weak Tokyo CPI, February decline in focus
The Japanese yen saw the USD/JPY pair slip 0.2% on Friday and was on track to gain 0.7% for February.
Pressure on the yen intensified as uncertainty grew over the timing of the Bank of Japan’s next interest rate hike. Those doubts deepened following softer-than-expected consumer price index data from Tokyo for February.
The reading—often viewed as a leading indicator for nationwide inflation—showed core CPI falling below the BOJ’s 2% annual target for the first time in nearly four years, potentially complicating the central bank’s plans for further rate increases.
The yen had weakened earlier in February amid concerns about the fiscal implications of Prime Minister Sanae Takaichi’s proposed stimulus measures and tax cuts. However, she appeared to gain momentum for advancing her fiscal agenda after her ruling coalition secured a supermajority in Japan’s lower house of parliament.
Chinese Yuan slips after PBOC lowers FX risk reserve ratio
The Chinese yuan’s USD/CNY pair rose 0.2% on Friday after the People’s Bank of China removed a key foreign exchange risk reserve requirement for certain forward contracts—a step that makes dollar purchases cheaper domestically.
The move follows a strong rally in the yuan against the dollar in recent months, partly fueled by exporters offloading the greenback amid a robust trade surplus with the United States.
However, rapid appreciation of the yuan can weigh on Chinese exporters by shrinking returns on overseas sales. Friday’s decision suggests the central bank may be aiming to curb further strength in the currency.
The yuan had approached a three-year high on Thursday before pulling back.
Australian dollar set for February gains on hawkish RBA outlook
The Australian dollar’s AUD/USD pair climbed 0.25% on Friday, ranking among Asia’s top performers for the month.
The Aussie was on track to advance 2.3% in February, largely supported by a more hawkish stance from the Reserve Bank of Australia. The central bank raised interest rates by 25 basis points earlier in the month and signaled it would tighten further if inflation fails to ease.
Stronger-than-expected January CPI data released this week reinforced expectations that the RBA could deliver additional rate hikes.
Elsewhere in the region, most Asian currencies edged lower on Friday. The South Korean won’s USD/KRW pair ticked up slightly but remained down 1.3% for February.
The Indian rupee’s USD/INR pair steadied after climbing back above the 91-per-dollar mark, though it was still 0.8% weaker this month, despite gaining support from a U.S.–India trade agreement.
Meanwhile, the Singapore dollar’s USD/SGD pair was little changed on the day and down 0.7% for February.
Most Asian currencies traded in a tight range on Thursday as lingering uncertainty over U.S. trade policy kept sentiment cautious, though the Chinese yuan and Japanese yen stood out on domestic drivers.
The US Dollar Index slipped 0.1% during Asian trading hours, with its futures also down 0.1% as of 00:22 ET (05:22 GMT).
Chinese yuan surges to 34-month high on policy hopes
China’s onshore yuan strengthened, with USD/CNY sliding 0.5% to a new 34-month low of 6.834 ahead of the country’s annual parliamentary session, the National People’s Congress. Markets are betting on fresh policy backing as investors look for growth targets and potential fiscal stimulus signals that will shape Beijing’s economic agenda for the year.
The offshore yuan also advanced, with USD/CNH touching its weakest level since mid-April 2023.
Elsewhere in the region, currencies were mostly subdued as concerns over U.S. tariffs persisted. President Donald Trump’s 10% global tariffs came into force earlier this week, with plans underway to raise them to 15%.
The South Korean won was little changed after the Bank of Korea kept its benchmark rate steady at 2.5%, in line with expectations. The Singapore dollar edged 0.1% higher against the greenback, while the Indian rupee gained 0.1%. The Australian dollar rose 0.2%.
Yen rebounds on BOJ rate hike expectations
The Japanese yen strengthened, with USD/JPY falling 0.4%, after Kazuo Ueda, Governor of the Bank of Japan, said policymakers would carefully assess incoming data at their March and April meetings, leaving room for another rate hike if inflation and wage growth remain solid.
His comments bolstered expectations that Japan will stay on a gradual path toward policy normalization.
The yen had weakened a day earlier following reports that Prime Minister Sanae Takaichi adopted a cautious stance on further tightening and after two more dovish-leaning members were nominated to the BOJ board.
Analysts at ING said the addition of new board members would broaden the range of views in policy discussions, though no single perspective is likely to dominate. They added that a June rate hike appears more likely than one in April, pending confirmation of strong spring wage gains and April inflation data.
The U.S. dollar recovered on Tuesday after the prior session’s slide, supported by upbeat economic data, while investors stayed cautious amid fresh volatility tied to President Donald Trump’s tariff policies.
At 15:24 ET (20:24 GMT), the Dollar Index—measuring the greenback against six major currencies—rose 0.2% to 97.86, after falling as much as 0.5% a day earlier.
Strong data underpin dollar
Encouraging economic releases lent the dollar some backing. ADP reported a gain of 12.8K in private payrolls last week, exceeding the previous reading. In addition, the Conference Board’s consumer confidence index for February surprised to the upside at 91.2.
According to José Torres, senior economist at Interactive Brokers, the stronger-than-expected figures nudged both the dollar and yields modestly higher, with a bear-flattening move led by shorter-dated maturities that are more sensitive to monetary policy.
He noted that firmer labor data are pushing rates up, as improving employment conditions weaken the case made by dovish Federal Reserve members for interest rate cuts based on softening job trends.
Trade tensions cloud outlook
Despite the rebound, uncertainty surrounds the U.S. currency as Trump’s revised tariff plans take shape following a Supreme Court ruling that his use of a 1977 emergency law to impose tariffs overstepped his authority.
In response, Trump said he would lift a temporary import tariff from 10% to 15% on goods from all countries. The move has cast doubt on the reliability of trade agreements reached prior to the ruling. Reflecting this uncertainty, the European Parliament delayed a vote on the European Union’s trade pact with the United States due to the new import tax.
Trade concerns have resurfaced at a time when questions are also emerging over the durability of heavy investment in artificial intelligence and the resilience of the U.S. economy after last week’s weak growth data.
Euro steady; Yen under pressure
In Europe, EUR/USD slipped 0.1% to 1.1779, with the euro largely steady after ECB President Christine Lagarde reiterated in Washington that the European Central Bank’s rate policy remains in a “good place,” while emphasizing the need for flexibility.
GBP/USD edged up 0.1% to 1.3501 ahead of parliamentary testimony from four Bank of England rate-setters, which may shape expectations before the March policy meeting.
In Asia, USD/JPY jumped 1% to 155.76 as expectations for near-term tightening by the Bank of Japan softened. The yen was also pressured by a Nikkei report suggesting U.S. authorities led recent rate-check efforts aimed at supporting Japan’s currency.
USD/CNY fell 0.4% to 6.8830 after the People’s Bank of China kept its one-year and five-year loan prime rates unchanged, signaling Beijing’s preference for calibrated support while balancing growth and financial stability. Chinese markets reopened Tuesday following the Lunar New Year holiday.
Elsewhere, AUD/USD rose 0.1% to 0.7060, while NZD/USD advanced 0.2% to 0.5967.
The U.S. dollar weakened on Monday as investors assessed the implications of the Supreme Court of the United States decision to strike down tariffs introduced by Donald Trump, along with the administration’s subsequent response.
Traders were also monitoring renewed nuclear negotiations between Washington and Tehran.
As of 14:12 ET (19:12 GMT), the Dollar Index — which measures the greenback against a basket of six major currencies — was down 0.2% at 97.65. The currency had posted a gain of roughly 1% last week, marking its strongest weekly advance in more than four months.
Dollar pressured by mounting trade uncertainty
The Supreme Court of the United States ruled on Friday that sweeping tariffs introduced by Donald Trump exceeded his authority. In response, Trump criticized the court and unveiled a blanket 15% levy on imports.
The new duties are set to remain in place for 150 days, but it remains unclear whether the U.S. government must reimburse importers for tariffs already collected, as the Court did not address that issue.
The uncertainty could trigger prolonged legal battles and further confusion as Trump explores alternative mechanisms to reinstate broad-based global tariffs on a more permanent footing.
Thierry Wizman, global FX and rates strategist at Macquarie, said the firm’s bearish U.S. dollar outlook for 2026 was based on the view that tariffs signal U.S. “disengagement” from the rules-based order underpinning free trade. He added that tariff conflicts themselves generate uncertainty centered on the United States — a negative for the dollar.
“In that sense, while the Supreme Court ruling may have strengthened institutional checks, it also heightens uncertainty, as Trump is likely to revive the tariff war through different — and more legally grounded — channels that have yet to be detailed. We see no reason to revise our broader expectation for a weaker USD in 2026,” Wizman said.
Beyond trade policy, investors are also watching a U.S. military buildup in the Middle East aimed at pressuring Iran to abandon its nuclear ambitions, with further talks between Washington and Tehran expected later this week.
Euro advances as confidence in Europe strengthens
In Europe, EUR/USD rose 0.2% to 1.1799, with the single currency drawing support from trade-driven weakness in the dollar.
Growing confidence in the region’s economic outlook also underpinned the euro, following data on Friday showing eurozone business activity expanded faster than expected this month, as manufacturing returned to growth for the first time since October.
Momentum was reinforced on Monday as Germany’s Ifo business climate index climbed to 88.6 from 87.6 the previous month, signaling improving sentiment in Europe’s largest economy.
Meanwhile, GBP/USD added 0.1% to 1.3497, with sterling firming ahead of key event risks this week — including testimony before the Treasury Committee by Andrew Bailey, governor of the Bank of England, and Thursday’s UK by-election in Gorton and Denton.
Yen edges higher
In Asia, USD/JPY fell 0.4% to 154.48, with the Japanese yen supported by its traditional safe-haven appeal as investors remained cautious about the economic impact of higher U.S. tariffs. Trading volumes were thinner due to a public holiday in Japan.
USD/CNY was little changed at 6.9087, with Chinese markets shut for New Year holidays. Elsewhere, AUD/USD declined 0.3% to 0.7060, while NZD/USD also dropped 0.3% to 0.5961.
Thierry Wizman of Macquarie said that while the dollar could remain under pressure amid persistent U.S.-driven uncertainty, some currencies — such as the yuan and the euro — may outperform, whereas others, including the Canadian and Mexican pesos, could lag. He added that even in the face of potential credit rating actions, long-term U.S. Treasury yields might rise due to uncertainty over revenue replacement, and equities could come under strain if higher yields lead to valuation compression.
Oil prices edged higher during Asian trade on Tuesday, remaining just under the seven-month peaks reached in the prior session, as markets looked ahead to upcoming U.S.–Iran discussions later this week. Ongoing uncertainty surrounding trade tariffs continued to temper investor sentiment.
At 22:22 ET (03:22 GMT), Brent crude futures climbed 0.8% to $72.04 per barrel, while U.S. West Texas Intermediate (WTI) crude futures also advanced 0.8% to $66.81 per barrel.
Both benchmarks had approached seven-month highs in the previous session before ending slightly lower.
Market participants are holding back ahead of US – Iran talks scheduled for later this week.
Markets stayed tense ahead of a third round of nuclear talks between Washington and Tehran set for Thursday in Geneva. Strains have persisted since last week amid indications that the situation could escalate. The U.S. pulled some non-essential embassy staff from Beirut, underscoring concerns that diplomacy might collapse and spark conflict.
President Donald Trump warned in a social media post on Monday that it would be a “very bad day” for Iran if no agreement is reached.
“In the event of a deal, we would likely see a significant unwinding of the risk premium currently built into prices — though securing such an agreement is far from straightforward,” analysts at ING noted.
A failure in negotiations could heighten worries about stricter sanctions enforcement or potential disruptions in the Strait of Hormuz, a crucial corridor for global crude shipments. Fears of a possible military clash contributed to a 6% surge in oil prices last week.
Tariff tensions under Donald Trump weigh on demand outlook
Oil markets are also contending with wider macro uncertainty after the Supreme Court of the United States invalidated an earlier round of tariffs introduced under emergency powers.
Donald Trump has since sought to reinstate duties of up to 15% using alternative legal provisions and cautioned that countries that “play games” in trade negotiations with the U.S. could be hit with steeper tariffs.
The risk of renewed trade tensions has darkened the global growth and fuel demand outlook, limiting oil’s advance even as geopolitical concerns continue to lend support to prices.
Oil prices fell more than 1% in Asian trading on Monday, taking a breather after last week’s sharp rally, as investors assessed the likelihood of a third round of U.S.-Iran nuclear negotiations and renewed uncertainty around U.S. trade policy.
By 20:50 ET (01:50 GMT), Brent crude for April delivery dropped 1% to $71.03 a barrel, while WTI crude declined 0.9% to $65.75 a barrel.
Both benchmarks had climbed nearly 6% last week amid signs of a potential U.S.-Iran confrontation and an unexpected drawdown in U.S. crude inventories, which supported prices.
Traders watch third round of U.S.- Iran nuclear talks
Iran and the United States are expected to hold a third round of nuclear discussions on Thursday in Geneva, raising hopes that tensions may ease.
Iranian Foreign Minister Abbas Araghchi told CBS’s “Face the Nation” on Sunday that there is a strong possibility of reaching a diplomatic resolution, adding that an agreement is within reach. Markets viewed the remarks as a signal of potential compromise.
Iran is a major producer within OPEC and possesses some of the largest proven oil reserves globally. The country also borders the Strait of Hormuz, a vital chokepoint that handles about one-fifth of the world’s seaborne oil. Any escalation involving Iran could disrupt shipments and drive up freight and insurance costs.
Trump raises global tariffs to 15%
Meanwhile, U.S. President Donald Trump unveiled new global tariffs, initially imposing a 10% duty on imports for 150 days after the U.S. Supreme Court invalidated his previous, broader tariff plan.
The administration increased the rate to 15% on Saturday—the maximum permitted under the applicable law—adding fresh uncertainty to global trade and demand prospects.
Higher tariffs can strain supply chains and prompt retaliatory actions from trade partners. Slower trade activity and weaker industrial production typically weigh on fuel consumption.
The Australian government has pledged to “consider every possible response” after President Donald Trump raised the standard import tariff to 15%. The abrupt increase came just a day after an initial 10% rate was announced, surprising global markets.
Trade Minister Don Farrell described the decision as “unjustified” and suggested it could strain relations between the long-standing strategic partners. The move follows a U.S. Supreme Court ruling that invalidated the administration’s earlier targeted tariff system as unlawful.
In reaction, the President shifted to a universal global tariff. The first 10% duty is scheduled to take effect at 12:01 a.m. EST on February 24, but the implementation date for the additional 5% remains uncertain, leaving exporters with goods already in transit facing heightened uncertainty.
Economic repercussions and Australia’s reaction
For Australia, the implications are significant. As a leading exporter of iron ore, LNG, and agricultural commodities, a 15% tariff could erode the competitiveness of Australian products in the U.S. market. Trade Minister Don Farrell confirmed that officials are coordinating closely with Australia’s embassy in Washington to evaluate the potential impact.
Analysts note that keeping “all options on the table” may involve filing a formal complaint with the World Trade Organization (WTO) or imposing reciprocal, tit-for-tat duties on American imports. Such action would represent an unusual trade clash between AUKUS allies.
The across-the-board 15% tariff reflects a broad, uniform policy that overlooks customary bilateral arrangements. Should Canberra proceed with countermeasures, it could affect multi-billion-dollar energy and defense agreements that are currently being negotiated.
Market turbulence and the investor outlook
Investors are already responding to the uncertainty. The Australian Dollar (AUD) came under immediate pressure as traders assessed the potential blow to the nation’s trade balance, while mining and energy shares adopted a more cautious tone.
Should the full 15% tariff be implemented without carve-outs, Australian exporters may have to accelerate their shift toward Asian markets, potentially deepening the divide between Western trading partners.
Attention is now fixed on the February 24 deadline. If the White House does not clarify whether allies will receive exemptions, the risk of a formal trade conflict increases. Analysts caution that much of the added cost could ultimately be passed on to American consumers, heightening concerns about renewed inflation.
Thursday’s headline from the United States Department of Commerce showed the U.S. trade deficit widening sharply to $70.3 billion in December and reaching $901.5 billion for full-year 2025. December imports jumped 3.6% to $357.6 billion, while exports fell 1.7% to $287.3 billion. Economists had projected a $55.8 billion gap, making the release a significant downside surprise that prompted many to cut fourth-quarter GDP forecasts. Following the data, the Federal Reserve Bank of Atlanta lowered its Q4 GDP estimate to 3% from 3.6%.
The Commerce Department’s preliminary report showed the economy expanded at just a 1.4% annualized pace in Q4, well below the 2.8% consensus estimate. Federal government spending dropped 16.6% during the quarter — largely due to the shutdown — subtracting roughly one percentage point from growth. The wider trade deficit further weighed on output. For all of 2025, GDP rose 2.2%. Treasury yields drifted lower after the report, increasing expectations that the Federal Reserve may move toward another rate cut.
One potential obstacle to near-term easing is inflation. The Personal Consumption Expenditures (PCE) index rose 0.4% in December and 2.9% year-over-year. Core PCE, excluding food and energy, also climbed 0.4% on the month and 3% annually. On a positive note, consumer spending advanced 0.4% in December, offering some support for future growth momentum.
In financial markets, private credit came under scrutiny after Blue Owl Capital permanently restricted redemptions from one of its retail vehicles, Blue Owl Capital Corp II. The move triggered declines in alternative asset managers including Ares Management, Apollo Global Management, KKR, Blackstone, and TPG. Adding to concerns, BlackRock recently marked down portions of its private credit portfolio. Former PIMCO CEO Mohamed El-Erian publicly questioned whether this could signal a broader stress point for the sector.
In a separate development, The Wall Street Journal reported that President Donald Trump ordered the release of government files related to UFOs and unidentified aerial phenomena following heightened public interest. The directive reportedly came after comments by former President Barack Obama referencing extraterrestrial topics. Christopher Mellon, who previously helped publicize the “Tic Tac” military footage, suggested the move could have far-reaching implications.
Taken together, the combination of a widening trade deficit, softer GDP growth, persistent inflation, and emerging private credit strains presents a complex macro backdrop — one that leaves markets balancing expectations of further rate cuts against lingering structural risks.
When President Donald Trump returned to the White House in January 2025, he reaffirmed tariffs as the core instrument of his economic strategy — a blend of leverage, protectionism, and industrial revival. That strategy is now facing meaningful strain.
The recent ruling by the Supreme Court of the United States that Trump exceeded his authority in imposing sweeping global tariffs without congressional approval represents more than a procedural setback. It challenges the legal scaffolding underpinning a trade agenda that has shaped U.S. economic and foreign policy over the past year.
Markets have taken note — but without panic.
The contrast is notable. A defining pillar of presidential economic policy has been curtailed, yet equity markets remain resilient. Volatility has surfaced intermittently, but capital has not fled risk assets. Understanding this requires separating political drama from financial mechanics.
In theory, tariffs were meant to rebalance trade and accelerate reshoring. In practice, they largely operated as a cost-transfer mechanism. Importers absorbed part of the burden; consumers absorbed another portion through higher goods prices. Manufacturers dependent on global inputs faced margin compression. Retailers recalibrated pricing strategies. Supply chains, already strained in prior years, became more complex.
Economic data reflect this friction. Growth momentum has slowed from last year’s pace. Manufacturing surveys show uneven demand. Trade-sensitive capital expenditure has cooled. Meanwhile, inflation remains sticky — particularly in services — and goods categories exposed to import costs have seen renewed firmness. The anticipated mix of rapid expansion and stable prices has not materialized.
Markets, however, trade forward expectations — earnings trajectories and liquidity conditions — rather than political symbolism.
Large-cap U.S. equities continue to attract global capital, particularly in AI and advanced technology. Investment in semiconductors, cloud infrastructure, and computing capacity remains strong despite macro uncertainty. Earnings concentration in these sectors offsets weakness in more cyclical areas.
Investors see deceleration, not collapse. Corporate balance sheets remain broadly healthy. Employment is moderating but not deteriorating sharply. Financial conditions are tighter than in prior cycles, yet not restrictive enough to signal systemic stress.
Against this backdrop, a potential scaling back of tariffs introduces nuance rather than shock.
If trade barriers are diluted or subject to firmer congressional oversight, input costs could ease over time. That may gradually relieve goods-based inflation pressures. Supply chain planning could improve. Corporate forecasting may gain clarity — and clarity reduces risk premiums.
Bond markets reflect this balance. Treasury yields have fluctuated as investors weigh persistent inflation against moderating growth. Should tariff-driven price pressures fade, longer-term yields may stabilize. However, fiscal deficits and wage resilience continue to exert upward pressure. The tension remains unresolved.
Currency markets face competing forces. Reduced trade escalation could temper safe-haven demand for the dollar. Yet relative U.S. growth and yield differentials still offer structural support. Conviction remains limited.
Emerging markets are unlikely to move uniformly. Economies closely tied to U.S. demand may feel slower export momentum if domestic growth softens. Commodity exporters could benefit if inflation expectations anchor raw material prices at elevated levels. Capital allocation is becoming more selective.
None of this implies smooth conditions ahead.
Political backlash to the court’s decision could generate renewed volatility. Legislative countermeasures remain possible. Trade partners will recalibrate strategy in response to shifting U.S. authority.
Markets tend to resist escalation but adapt to adjustment.
Trump’s tariff strategy was presented as transformative. The measurable economic payoff has been less decisive. Growth has moderated, inflation has persisted, and structural trade imbalances remain largely intact.
Investors are pragmatic. A policy losing legal footing does not automatically trigger liquidation. If the outcome is reduced uncertainty and steadier price dynamics, equities can continue advancing even as political narratives fragment.
Cautious optimism defines the current tone.
Risk appetite remains conditional. A renewed acceleration in inflation would alter expectations quickly. A material deterioration in employment would challenge confidence. Fiscal expansion without corresponding growth would intensify long-term sustainability concerns.Markets are not celebrating policy unraveling — they are recalibrating probabilities.
The assessment is sober: an economy that is softer but not broken; inflation that is persistent but not runaway; profitability concentrated but durable in structurally advantaged sectors.Trade authority may now face clearer constitutional limits. Structural investment in innovation continues.
Capital ultimately flows toward earnings visibility and long-duration growth themes. Tariffs have dominated headlines. Technology and AI dominate capital expenditure.
Investors are adjusting exposure and preparing for volatility — but not retreating.The tariff agenda is under pressure. Financial markets, for now, are looking past it.
For more than a year, Donald Trump has operated in Washington with sweeping confidence, exercising power in ways critics said resembled monarchical authority. On Friday, however, the Supreme Court of the United States sharply redirected that momentum.
By invalidating his administration’s cornerstone economic policy, the court handed down a rare and highly visible rebuke, signaling that even a dominant president faces constitutional limits. The 6–3 ruling, written by Chief Justice John Roberts, rejected Trump’s expansive claim that he could impose broad tariffs under emergency powers to safeguard U.S. economic security.
Trump reacted swiftly and angrily. According to Delaware Governor Matt Meyer, the president told governors at the White House that he was “seething” and needed to respond to the courts. Later, speaking to reporters, he criticized the justices who ruled against him — including two he had appointed — calling them weak and an embarrassment. Still, he maintained that the decision ultimately clarified his authority and insisted he could pursue even higher tariffs through alternative legal avenues.
Few issues have defined Trump’s second term more than tariffs, which he has frequently described as his “favorite word.” He used them not only as trade tools but as leverage in disputes over agriculture, foreign investment, narcotics trafficking, prescription drug pricing, and industrial policy. While Congress holds constitutional authority over taxation, the Republican-controlled legislature largely refrained from challenging his approach, and the conservative-leaning court had often bolstered executive power in prior rulings.
This decision, however, marked a boundary. Historians and legal scholars described it as a direct blow to Trump’s broad interpretation of emergency authority under the International Emergency Economic Powers Act. Although the president suggested he could rely on other statutes — and even impose a temporary global tariff — such paths would likely involve stricter procedural requirements and time constraints.
Legal experts noted that no previous president had used the disputed law as aggressively. As University of Virginia scholar Saikrishna Prakash put it, the ruling leaves the presidency “definitely weaker,” underscoring that even assertive executive power remains subject to judicial review.
The U.S. Supreme Court’s decision on Friday to overturn trade tariffs introduced by President Donald Trump last year could ease financial pressure on certain oil producers and drilling firms, though analysts say it is unlikely to significantly reshape global energy trade flows in the near term.
By striking down the tariffs, the Supreme Court of the United States may lower the cost of constructing LNG facilities and other major energy projects that depend on foreign-made modules and components. For instance, Venture Global assembles parts of its LNG plants in Italy before shipping them to the U.S. for completion — a process that had become more expensive under the tariff regime. U.S. crude producers and oilfield service firms also faced higher costs for imported equipment and materials, with some absorbing the impact and others attempting to pass it along to customers.
Cam Hewell, CEO of Premium Oilfield Technologies, said his company had expected to pay $5–6 million in tariff-related taxes in 2026 — a figure that may now decline. He noted that most of the added costs had been absorbed internally, meaning customer pricing would see little change, but improved cash flow could support research, employee compensation, and shareholder returns.
Kirk Edwards, president of Latigo Petroleum in Texas, added that the ruling could improve budgeting clarity and cost visibility for drilling projects.
However, the decision does not eliminate the 50% tariffs on steel and aluminum imposed last year, and some executives remain cautious that the administration could pursue alternative measures to maintain similar trade barriers. Trump himself indicated he may introduce a 10% global tariff for 150 days, signaling that policy uncertainty remains.
Despite the potential cost relief for LNG infrastructure, experts believe global LNG trade patterns are unlikely to shift materially. Ira Joseph of Columbia University’s Center on Global Energy Policy said China has stronger economic incentives to continue redirecting U.S. LNG cargoes to Europe for arbitrage or to import cheaper oil-indexed LNG from the Middle East.
Alex Munton of Rapidan Energy added that Beijing increasingly views LNG purchases as strategic leverage in its relationship with Washington, making new buying commitments unlikely even if tariff pressures ease. Samantha Santa Maria-Hartke of Vortexa echoed that view, suggesting China — which halted U.S. crude and LNG imports after imposing retaliatory tariffs — is unlikely to reverse course in the near term.
The U.S. dollar edged lower on Friday as investors digested the impact of the Supreme Court’s decision to invalidate President Donald Trump’s broad tariff measures. Despite the pullback, the greenback remained on track for its strongest weekly advance since November, supported by a more hawkish tone from the Federal Reserve and ongoing geopolitical tensions between the U.S. and Iran.
As of 17:31 ET (22:31 GMT), the Dollar Index slipped 0.2% to 97.72, though it was still poised to post a weekly gain of around 1%, its best showing in nearly three months.
The Supreme Court ruled 6–3 that Trump lacked authority under the International Emergency Economic Powers Act (IEEPA) to implement sweeping reciprocal tariffs. The president criticized the decision as “deeply disappointing” and indicated that tariffs would remain in effect through alternative legal channels, alongside a new 10% global levy.
According to Jeff Buchbinder of LPL Financial, removing the tariff overhang eliminates a drag on economic growth that had been expected to lift costs and pressure corporate margins. With that risk easing, growth may stabilize and inflation expectations embedded in bond markets could cool more quickly, potentially prompting a modest reassessment of Fed rate-cut expectations and weighing slightly on the dollar.
Even so, the dollar had attracted demand earlier in the week, underpinned by resilient U.S. economic data, hawkish Fed meeting minutes, and heightened Middle East tensions.
Friday’s data, however, delivered mixed signals. Core PCE — the Fed’s preferred inflation measure — rose 0.4% month-over-month and 3.0% year-over-year in December 2025, marking the highest annual reading since November 2023 and remaining well above the 2% target. Meanwhile, preliminary fourth-quarter GDP growth came in at 1.4%, falling short of the 2.8% consensus forecast.
In Europe, EUR/USD ticked up 0.1% to 1.1781, though the euro was still headed for a 0.7% weekly decline amid uncertainty surrounding ECB President Christine Lagarde’s tenure and softer German producer price data. Analysts at ING noted that while sentiment indicators such as the ZEW survey disappointed, the eurozone composite PMI is expected to stay above the 50 threshold, limiting downside pressure on the euro.
GBP/USD rose 0.1% to 1.3474, but sterling hovered near a one-month low and was set for a weekly loss of about 1.3%. Strong January retail sales — up 1.8% month-over-month and 4.5% year-over-year — failed to provide sustained support. ING analysts said markets are pricing in a Bank of England rate cut in March, with another possible move in June, while political risks continue to weigh on the pound.
In Asia, USD/JPY held steady at 155.06 after data showed Japan’s inflation slowed to 1.5% in January, slipping below the Bank of Japan’s target for the first time in nearly four years. Core inflation excluding fresh food and fuel also moderated, reinforcing uncertainty over the timing of the next rate hike. Separate data showed Japanese factory activity expanded at its fastest pace in over four years in February.
USD/CNY was unchanged at 6.9087, with Chinese markets closed. Meanwhile, AUD/USD climbed 0.5% to 0.70892, although the Australian dollar trimmed some gains after unemployment held at 4.1% in January, signaling a still-tight but gradually cooling labor market.
Oil prices moved modestly higher in Asian trading on Friday, building on strong gains from the prior two sessions and putting major benchmarks on course for roughly a 6% weekly advance, as rising tensions between the U.S. and Iran heightened concerns about potential supply disruptions in the Middle East.
By 22:41 ET (03:41 GMT), Brent for April delivery climbed 0.2% to $71.81 a barrel, while West Texas Intermediate (WTI) crude rose 0.5% to $66.78 a barrel.
Both contracts were hovering near their highest levels since early August and were set to record weekly gains of more than 6%.
Oil near six-month high on US-Iran tensions
Investor anxiety has intensified after U.S. President Donald Trump warned Tehran that “bad things” could follow if a nuclear agreement is not reached within roughly 10–15 days, raising the possibility of military action.
According to a Wall Street Journal report, Trump is considering a limited strike on Iranian targets to pressure Tehran into accepting a nuclear deal.
Any escalation involving Iran — a key OPEC producer — could jeopardize shipments through the Strait of Hormuz, a vital passageway that handles about one-fifth of global oil trade, thereby increasing the market’s sensitivity to geopolitical risk.
This week’s rally also marked a rebound from earlier losses, when prices slipped at the start of the week on hopes that U.S.-Iran negotiations were making progress. The renewed tough rhetoric has since restored a geopolitical risk premium, pushing crude back toward multi-week highs.
US crude inventories drop sharply – EIA
Data from the U.S. Energy Information Administration on Thursday showed crude stockpiles fell by around 9 million barrels last week, defying expectations for a 1.7 million-barrel increase.
The report also indicated declines in gasoline and distillate inventories, both coming in below forecasts, suggesting solid demand from refiners and consumers.
Markets are now awaiting the release of the U.S. Personal Consumption Expenditures (PCE) Price Index later on Friday — the Federal Reserve’s preferred measure of inflation.
Following recent hawkish Fed minutes that signaled policymakers are in no rush to cut interest rates, the PCE data could offer additional insight into the central bank’s policy trajectory.
As fourth-quarter 2025 earnings season draws to a close, Nvidia (NVDA) is once again set to headline the finale, with its results due on February 25. Following Super Micro Computer (SMCI) reporting an impressive 123% surge in sales, expectations are high that Nvidia will once more capture investors’ attention.
Additional momentum came from Taiwan Semiconductor Manufacturing Company (TSM), which posted a 37% jump in January revenue—its fastest pace in months and well above its 30% growth outlook for 2026. As a key supplier of advanced chips for Microsoft Surface devices, Apple computers, and Nvidia’s GPUs, TSM’s strong performance reinforces the view that the AI expansion is accelerating, a positive signal for Nvidia’s forward guidance.
On the geopolitical front, U.S. Secretary of State Marco Rubio received a warm reception, including a standing ovation, for his remarks at the Munich Security Conference. While European leaders praised his speech, they reiterated their commitment to Net Zero emissions targets and emphasized their desire to play a central role in discussions regarding Ukraine and Russia.
Meanwhile, French President Emmanuel Macron has publicly suggested that President Trump aims to weaken the EU. Facing domestic political pressure, including strong influence from Marine Le Pen in parliament, Macron appears to be rallying pro-EU supporters ahead of the 2027 European elections, where anti-EU parties are expected to gain ground.
Tensions between France and Germany have added strain to the European Union, though Germany and Italy have recently aligned more closely due to their interconnected manufacturing sectors. Poland, by contrast, stands out for its strong economic growth. At the Munich conference, a Polish official voiced disagreement with U.S. policy on the EU’s Net Zero agenda—an interesting stance given Poland’s continued reliance on coal. However, its relatively low electricity costs have supported industrial expansion, potentially attracting manufacturing activity under stricter EU emissions rules.
Elsewhere, Iran has reportedly floated the idea of temporarily halting uranium enrichment and exploring potential commercial arrangements with the U.S. President Trump commented that Iran likely prefers a deal to facing the consequences of failing to reach one. Hopes of incremental diplomatic progress have slightly eased gold prices, although a comprehensive agreement between the two nations appears unlikely in the near term.
WTI prices could stage a rebound as supply concerns intensify amid escalating US-Iran tensions and stalled Ukraine-Russia negotiations.
Talks between Washington and Tehran have yielded little concrete progress, with Iranian officials only اشاره to a broad framework for a potential nuclear agreement, leaving uncertainty over future crude exports.
Meanwhile, peace discussions between Ukraine and Russia held in Geneva concluded without a breakthrough, sustaining geopolitical risks that may continue to underpin oil prices.
West Texas Intermediate (WTI) crude slips slightly on Thursday after plunging 4.9% in the previous session, hovering around $65.00 per barrel during Asian trading. Despite the recent drop, oil prices may find support from potential supply disruptions linked to rising US-Iran tensions and stalled Ukraine-Russia peace efforts.
Negotiations between Washington and Tehran remain unresolved. Iranian officials have pointed to a “general agreement” on the framework of a possible nuclear deal, but key differences persist. US Vice President JD Vance stated that Iran failed to meet Washington’s red lines, while US President Donald Trump reiterated that military action remains an option. Reports suggest that any potential US strike could develop into a prolonged campaign, with Israel advocating for an outcome aimed at regime change in Iran.
Meanwhile, peace talks in Geneva between Ukraine and Russia concluded without tangible progress, according to Reuters. Ukrainian President Volodymyr Zelenskiy accused Moscow of stalling US-backed diplomatic efforts to end the four-year conflict. Trump has urged Kyiv to consider a deal that could involve significant concessions, even as Russian forces continue attacking energy infrastructure and making battlefield advances.
On the trade front, India’s state-run Bharat Petroleum Corporation Limited (BPCL) reportedly made its first-ever purchase of Venezuelan crude, while HPCL Mittal Energy Limited resumed buying cargoes from Venezuela for the first time in two years.
In US inventory data, the American Petroleum Institute (API) reported a 0.609 million-barrel decline in weekly crude stocks, partially offsetting the previous week’s massive 13.4 million-barrel build — the largest increase since January 2023.
One of the most significant macroeconomic trends of recent decades has been the sharp decline in labor’s share of income. As David Hay notes, the rise of populism in the US mirrors the long expansion in corporate profit margins — essentially the flip side of a prolonged downturn in labor’s share.
This shift was largely driven by favorable demographics and accelerating globalization. However, both forces now appear to be reversing. On the demographic front, Axios recently highlighted that older Americans are increasingly powering economic growth — a “gray-shaped” dynamic rather than the previously discussed K-shaped recovery.
Meanwhile, the inflationary cost of deglobalization may only be beginning to surface. According to Brean Capital, core CPI excluding used vehicles and shelter has ticked higher, with the three-month annualized rate climbing to 2.9% from 1.1% in December. This suggests tariff-related pressures may still be lingering, complicating hopes for a smooth return to the Fed’s 2% inflation target.
Financial markets are already reacting to these evolving macro conditions. As Callum Thomas observes, gold has been the best-performing asset class of the 2020s so far, while bonds have lagged significantly — raising questions about how the rest of the decade will unfold.
Leadership within equities is also shifting. Research from Daily Chartbook indicates that the “Magnificent Seven” peaked relative to the energy sector in December 2025, matching the same relative level seen in October 2020 — just before the Energy Select Sector SPDR Fund embarked on a 250% rally over the following two years.
So far this year, energy stands out as the stock market’s top-performing sector. According to Rob Thummel, the sector delivers what investors increasingly value: strong free cash flow, rising dividends, significant share buybacks, inflation hedging characteristics, and tangible asset exposure.
Echoing this thematic rotation, Goldman Sachs suggests the market may be entering what one seasoned client calls the “revenge of the dinosaurs” phase — a resurgence of traditional, capital-intensive industries in an era marked by structural inflation pressures and shifting global dynamics.
Oil prices moved sideways in Asian trading on Monday, as attention centered on renewed diplomatic engagement between the U.S. and Iran, with investors wary of possible supply disruptions in the Middle East.
Trading activity remained subdued due to public holidays in China and the U.S., while weak Japanese growth figures added to worries about slowing demand. Brent crude for April delivery slipped 0.2% to $67.65 per barrel by 21:15 ET (02:15 GMT).
U.S.– Iran nuclear talks to resume
The U.S. and Iran are set to hold a second round of discussions in Switzerland this week regarding Tehran’s nuclear program, following the restart of negotiations earlier in February. However, diplomatic efforts coincided with Washington deploying a second aircraft carrier to the Middle East and signaling readiness for extended military action should talks collapse.
President Donald Trump reiterated warnings that Iran must agree to a deal or risk further military measures. Over the weekend, Iranian officials indicated a willingness to make concessions on their nuclear activities in exchange for relief from tough U.S. sanctions, adding that the next move rests with Washington.
Tensions between the two countries have recently supported oil prices, as traders factored in a higher geopolitical risk premium amid fears of renewed conflict that could disrupt Iranian oil output.
OPEC+ considering renewed output increases
At the same time, some of oil’s geopolitical premium was tempered by a Reuters report suggesting that OPEC+ intends to restart production hikes from April. Higher output would enable member countries to capitalize on recent price gains, though increased supply could weigh on prices over the longer term.
The group is scheduled to meet on March 1.
Oil markets were pressured throughout 2025 by concerns of excess supply in 2026. Although OPEC+ gradually raised production last year, it paused further increases in December due to persistent oversupply worries.
Nonetheless, crude prices climbed to a six-month high in early 2026 amid escalating Middle East tensions, while signs of global economic resilience fueled expectations that demand would stay firm.
Oil prices were mostly stable in Asian trading on Friday but remained on course for a weekly loss after plunging nearly 3% in the prior session, as expectations of a substantial supply surplus and rising inventories pressured sentiment. By 21:07 ET (02:07 GMT), Brent crude for April delivery was up 0.1% at $67.56 a barrel, while WTI crude also edged 0.1% higher to $62.87. Both benchmarks had dropped close to 3% previously, leaving them down about 1% for the week.
IEA projects oil supply surplus and weaker demand growth outlook.
The International Energy Agency, in its latest monthly report, projected that the global oil market could see a surplus exceeding 3.7 million barrels per day in 2026, pointing to a pronounced supply overhang.
It also noted that global stockpiles grew last year at one of the fastest paces since the pandemic, reflecting comfortable supply levels. The agency lowered its forecast for global demand growth, citing a softer economic outlook and moderating consumption, even as non-OPEC production stays strong. This combination of weaker demand and resilient output has intensified concerns about prolonged oversupply.
In the U.S., the Energy Information Administration reported an 8.53 million-barrel increase in crude inventories this week—well above expectations and the largest build since January 2025—indicating sluggish refinery demand and abundant supply.
U.S.- Iran nuclear talks under scrutiny; U.S. CPI data awaited.
Meanwhile, investors monitored geopolitical developments after Donald Trump said negotiations over a potential U.S.-Iran nuclear deal could last up to a month.
The possibility of extended talks eased immediate fears of supply disruptions in the Middle East, reducing the geopolitical premium that had previously supported prices. Attention is also turning to U.S. CPI data due later Friday, which may provide further insight into the Federal Reserve’s rate outlook after strong January employment figures dampened hopes for near-term rate cuts.
Oil prices advanced in Asian trading on Wednesday as investors monitored developments in U.S.-Iran relations and looked ahead to travel demand during an upcoming major holiday in China.
Crude rebounded from part of the previous session’s losses, supported by a softer U.S. dollar ahead of key economic data releases.
By 21:04 ET (02:04 GMT), April Brent futures climbed 0.6% to $69.18 a barrel, while WTI crude futures also gained 0.6% to $64.19 a barrel.
Oil prices rise amid US-Iran tensions over potential supply disruptions.
On Tuesday, Iranian officials stated that recent nuclear discussions with the United States helped Tehran assess Washington’s intentions, adding that diplomatic engagement between the two nations would continue.
The remarks followed talks held last week regarding Iran’s nuclear program, which came after U.S. President Donald Trump sent several warships to the Middle East.
Although both sides indicated some progress from their weekend negotiations, attention shifted after the U.S. issued a maritime warning for vessels passing through the Strait of Hormuz.
Media reports also suggested that Trump was weighing the deployment of a second aircraft carrier near Iran—a step that could significantly heighten regional tensions.
Amid the uncertainty, oil markets incorporated a risk premium, as traders grew concerned that potential military action might disrupt Iranian oil supplies.
China’s Lunar New Year travel surge draws attention as CPI data falls short of expectations.
Oil prices found some support on expectations of stronger Chinese fuel consumption during the upcoming Lunar New Year holiday.
This year’s Lunar New Year, marking the Year of the Horse in the Chinese zodiac, falls on February 17 and will be observed with an extended nine-day public holiday from February 15 to 23.
The festive period typically drives higher consumer spending in China, particularly in travel. Authorities project a record 9.5 billion passenger journeys during the spring holiday travel rush.
International travel is set to include several favored destinations across Southeast Asia, though flights to Japan have reportedly declined sharply amid escalating diplomatic tensions between Beijing and Tokyo.
Meanwhile, recent economic data signaled that deflationary pressures persist in China, as consumer price index figures came in below expectations and producer prices continued to contract.
Last week, I attended the 2026 Harvard Presidents’ Seminar with leading executives and thinkers, where Ambassador Kevin Rudd, former Australian prime minister, stood out. He warned that the post–World War II rules-based global order is likely fading, giving way to a more 19th-century style world defined by power politics and spheres of influence. Rudd, a realist rather than an alarmist, argued that a strong U.S. remains essential for global stability, while a weakened U.S. risks creating power vacuums that China and Russia are ready to exploit.
A Fracturing Global Order?
For roughly eight decades after World War II, the United States played a central role in shaping the global order—promoting open markets, free trade, democratic expansion, and the U.S. dollar as the world’s reserve currency—underpinning a period of relative stability.
According to Rudd, that chapter may now be closing. Democratic governance is weakening worldwide, while the number of armed conflicts has climbed to its highest level since World War II.
China and Russia are making their ambitions increasingly explicit. Just last week, Xi Jinping and Vladimir Putin reaffirmed their deepening partnership, pledging mutual support across economic, military, and ideological fronts. With the New START treaty expiring this month, the final pillar of nuclear arms control between the United States and Russia has now fallen away.
Redrawing the Global Playbook
Rudd, who has written two major books on Xi Jinping, cautioned that China’s current leader is far from a pragmatist in the mold of Deng Xiaoping, whose market-oriented reforms in the 1970s set China on its path to global prominence. Instead, Xi is best understood as a Marxist-Leninist nationalist.
Under his leadership, China has moved beyond simply operating within existing global rules to actively reshaping them. The Chinese Communist Party is pursuing an all-encompassing strategy that spans nearly every sphere—military modernization, industrial leadership, energy self-sufficiency, and more. As I noted back in October, I see China’s expansive Belt and Road Initiative as a Trojan horse.
For Xi’s government, economic strength and national security are inseparable, a reality most evident in its approach to energy and technology.
China’s Sweeping Energy Expansion
As the U.S. continues to oscillate on energy policy, China has been pressing ahead at full speed. Since 2021, it has added more power-generating capacity than the United States has built over its entire 250-year history—an astonishing feat achieved in just four years.
In 2025 alone, China brought online 543 gigawatts of new capacity across solar, wind, coal, nuclear, and gas. Looking ahead, BloombergNEF projects an additional 3.4 terawatts over the next five years—nearly six times what the U.S. is expected to add. The objective is clear: to ensure that China’s next wave of industries, including AI, robotics, and advanced manufacturing, is never constrained by energy shortages.
Clean Energy Emerges as the Next Growth Engine
As I’ve noted before, both Elon Musk and NVIDIA CEO Jensen Huang have warned that China’s enormous power surplus could give it a decisive edge in AI computing—and the data backs that up.
In 2025, clean energy accounted for more than a third of China’s GDP growth and over 90% of new investment. Industries such as solar, electric vehicles, and battery technology generated more than $2.1 trillion in economic output, roughly on par with the GDP of Canada or Brazil. Viewed on its own, China’s clean energy sector would rank as the world’s eighth-largest economy.
Meanwhile, in Washington, progress remains stalled by politics.
By contrast, the United States has struggled to execute large-scale energy buildouts amid political gridlock and partisan divides. While China plans decades ahead, U.S. policymakers too often remain focused on the next election cycle.
According to a recent report from the Information Technology and Innovation Foundation (ITIF), China is on course to overtake the U.S. across a wide range of what it terms “national power industries.” These span military sectors such as guided missiles and tanks, dual-use industries like electronic displays and semiconductors, and enabling industries including automobiles and heavy construction equipment.
That said, the U.S. continues to commit heavily to defense spending. Congress recently approved an $839 billion defense bill—$8 billion more than requested by the Pentagon—with funding directed toward key systems such as the F-35, the B-21 bomber, and the Sentinel intercontinental ballistic missile program. More than $13 billion is also allocated to space and missile defense under President Trump’s Golden Dome initiative.
What This Means for Investors
Equity markets may already be signaling the start of a new investment cycle. In January, leadership shifted toward small-cap, domestically oriented stocks. While the S&P 500 hit new highs with a gain of about 1.4%, the Russell 2000 jumped 5.4%, markedly outperforming large caps. Small caps also logged a 15-day streak of outperformance versus the S&P—the longest since May 1996.
This strength does not appear to be a one-off. Since the beginning of Trump’s second term, the Russell 2000 has edged ahead of the S&P 500, rising roughly 17% versus 15% as of Friday, February 6. Some small-cap companies, though not all, tend to be less exposed to tariffs and could benefit over time in a less globalized world.
That said, careful stock selection is critical. Around 40% of Russell 2000 constituents are currently unprofitable.
Finally, with precious metals retreating from recent highs, investors may want to consider buying the dip. A 10% allocation to gold—split evenly between physical bullion and high-quality mining stocks—can help diversify portfolios, with regular rebalancing remaining essential.
Oil prices slipped in Asian trading on Monday as the United States and Iran indicated they would continue negotiations over Tehran’s nuclear program, easing concerns about heightened tensions in the Middle East.
Crude prices were also weighed down by a firmer U.S. dollar ahead of a busy week of key U.S. economic data, extending losses after a roughly 2% decline last week. Investors are additionally awaiting major economic releases from China, the world’s largest oil importer.
Brent crude futures for April dropped 0.7% to $67.57 a barrel by 21:17 ET (02:17 GMT), while West Texas Intermediate futures also fell 0.7% to $63.12 a barrel.
U.S. and Iran agree to press ahead with nuclear negotiations
Washington and Tehran said over the weekend that indirect nuclear negotiations will continue following what both sides described as constructive talks in Oman on Friday.
The statements helped ease fears of an imminent military confrontation in the Middle East, particularly after the United States had earlier deployed several warships to the region.
Concerns over a potential conflict had previously pushed traders to build a higher risk premium into oil prices, with former President Donald Trump also issuing threats of military action against Iran.
However, the likelihood of a full-scale war in the region now appears reduced, even as Tehran indicated it will continue advancing its nuclear enrichment activities.
Markets await key U.S. and China economic data
Attention this week is also on a slate of major economic data from the world’s largest oil-consuming economies.
In the United States, January nonfarm payrolls figures are due on Wednesday, followed by CPI inflation data on Friday. These releases will be closely scrutinized for further signals on the interest-rate outlook, as markets continue to assess the direction of monetary policy under Warsh.
In China, January CPI data is also scheduled for release on Friday, providing fresh insight into conditions in the world’s biggest oil importer.
The data arrives just ahead of China’s week-long Lunar New Year holiday, which is expected to boost fuel demand across the country.
Assessing the daily charts for gold and silver futures against a backdrop of rising trader anxiety, it is clear that the outcome of the meeting between U.S. and Iranian diplomats could soon determine the next directional move once markets receive clearer signals.
Volatility in both gold and silver futures has surged, leaving prices highly sensitive to the meeting’s outcome. Gold futures opened at $4,722.30, dipped to an intraday low of $4,671.74, and then rallied to trade near the session high around $4,907—just below immediate resistance at $4,938.55. This price action reflects mounting concern as U.S.–Iran talks begin amid fears of a potential direct conflict.
Despite the heightened tension, the situation remains unresolved. The U.S. is reportedly pressing Iran to freeze its nuclear program, dismantle its uranium stockpile, and expand discussions to include ballistic missiles, regional proxy support, and human rights issues. Iran, however, has stated that talks will be limited strictly to its nuclear program, and it remains unclear whether these fundamental differences have been bridged.
In recent weeks, President Donald Trump has warned of military action if a deal is not reached, while the U.S. has deployed thousands of troops and significant naval and air assets to the region. Iran has responded with threats of retaliation, including strikes on U.S. military targets in the Middle East and Israel.
This marks the first direct engagement between U.S. and Iranian officials since last June’s Israel–Iran conflict, during which U.S. forces struck Iran’s three primary nuclear facilities. Iran has since claimed that its uranium enrichment activities ceased following those attacks.
Meanwhile, precious metals have endured an extended selloff since last week. Initial pressure stemmed from President Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, a move interpreted as less dovish and supportive of a stronger U.S. dollar. The dollar is now on track for its strongest weekly performance since early October, with soft labor data doing little to halt its advance.
Looking ahead, any indication that talks may ease tensions between the U.S. and Iran could spark renewed selling in gold and silver, even though both futures have already rebounded modestly from their intraday lows. At this stage, dissecting technical rebounds or exhaustion signals may be premature. Instead, the focus remains squarely on the diplomatic outcome and whether it ultimately de-escalates the situation—or deepens existing tensions.
Looking at the current positioning of the spot gold–silver ratio, today’s session saw it test an intraday high of 72.77 and a low of 65.10, with the ratio currently trading around 66.39. This movement suggests that gold and silver futures may revisit price levels last seen between December 1 and 16, 2025—when gold futures were trading in the $4,207 to $4,340 range and silver futures were between $57 and $65.
Gold futures are currently trading above the key 50-EMA support near $4,580, while remaining capped below the immediate 9-EMA resistance around $4,885, after successfully holding above the short-term 20-EMA support at approximately $4,824.
Meanwhile, silver futures are holding above the key 100-EMA support near $62.692, but continue to trade below the immediate resistance at the 50-EMA around $74.252.
In summary, any constructive outcome from the meeting could prompt renewed selling pressure across both precious metals, while renewed disagreement between the two countries may spark a bout of buying. However, any upside could remain vulnerable to fresh selling, as follow-up commentary from the U.S. President after the meeting is likely to play a decisive role in shaping market sentiment.
Oil prices slipped in Asian trading on Friday and were on track for a weekly loss, as markets focused on whether upcoming U.S.–Iran talks could ease Middle East tensions. Investors also priced in a lower risk premium and took profits after last week’s strong gains. Brent futures for April held at $67.58 a barrel, while WTI futures edged up 0.1% to $63.09 by 21:13 ET (02:13 GMT).
U.S.–Iran negotiations are scheduled to be held in Oman.
U.S. and Iranian officials are scheduled to hold talks in Oman later on Friday, as military tensions in the Middle East intensify following Washington’s deployment of at least two naval fleets to the region. Investors are optimistic that dialogue between Tehran and Washington could ease tensions and reduce the risk of a wider conflict, prompting traders to strip some geopolitical risk premium from oil prices this week.
However, differences have emerged over the scope of the discussions, with Iran rejecting U.S. demands to address its missile program and insisting that talks will focus solely on its nuclear ambitions. Iran is a key global oil producer and sits alongside the Strait of Hormuz, a critical chokepoint for global crude shipments.
Oil set for weekly decline as profit-taking and a stronger dollar weigh
Brent and WTI futures were down between 2.5% and 4% for the week, as prices came under pressure from profit-taking after six straight weeks of gains. Crude had earlier been supported by expectations of tighter supply, particularly after extreme weather in the U.S. disrupted output nationwide.
Supply disruptions in Kazakhstan and concerns over an escalation of conflict in the Middle East also lent support to prices. However, sentiment shifted this week as traders locked in profits, while a broader selloff across commodities—driven by a strengthening U.S. dollar—further weighed on oil markets. The dollar was on track for its strongest weekly performance since October, as investors viewed Kevin Warsh, U.S. President Donald Trump’s nominee for the next Federal Reserve chair, as a less dovish choice.
The Chinese yuan has recently attracted strong demand, and Bank of America Securities believes this momentum could become a key driver of foreign exchange markets in both the near and longer term. On Tuesday, the People’s Bank of China set the yuan’s daily midpoint at 6.9533 per U.S. dollar—75 pips stronger than the prior fix—marking its firmest level in nearly 33 months and breaking below the 6.96 threshold. BofA analysts cited solid export performance and firmer policy guidance as reasons for upgrading their USD/CNY forecasts to 6.7 for the end of Q3 and Q4, from 6.8.
According to the bank, the yuan’s strength may have broader implications for global FX markets, as signs emerge that appreciation is spreading across trade-weighted measures, including the CFETS basket, and increasingly influencing emerging-market currencies. While correlation does not prove causation, BofA noted that the alignment between bilateral and trade-weighted CNY gains is becoming difficult to ignore. A softer U.S. dollar is further reinforcing EM currency strength alongside the yuan.
High U.S. tariffs have encouraged China to redirect exports from the U.S. toward Europe, a shift reflected in the European Union’s expanding trade deficit with China, now nearing levels last seen during the Covid period. Although part of this imbalance stems from a weaker yuan versus the euro, unlike during the pandemic, the widening deficit has not led to euro weakness. Instead, EUR/CNY has climbed to a ten-year high, intensifying pressure on European exporters and renewing calls for yuan appreciation. BofA expects Chinese export momentum into Europe to continue in the short term, though heightened EU scrutiny and anti-dumping measures could pose challenges over the medium term, potentially placing downward pressure on EUR/CNY.
The case for yuan appreciation is gaining traction, reinforced most recently by comments from President Xi emphasizing the goal of building a “powerful currency” that is widely used in global trade, investment, and foreign exchange markets, and that ultimately achieves reserve-currency status. This builds on Xi’s 2020 remarks outlining China’s ambition to reach high-income status by 2025 and significantly expand economic output by 2035. However, BofA cautioned that aggressive currency appreciation could lead to overvaluation and pose risks to financial stability.
In this context, the outcome of U.S.–China competition in artificial intelligence will be critical for productivity growth and the long-term sustainability of relative currency valuations. Given the continued dominance of the U.S. dollar and the U.S.-centered global financial system, BofA expects USD leadership to persist over the next decade. While full internationalization of the renminbi appears unlikely, a more realistic approach may involve expanding CNY usage across the Global South and Asia, potentially reducing the need for a sharply stronger yuan.
Oil prices fell in Asian trading on Thursday as traders pared back risk premiums after the U.S. and Iran confirmed talks would take place on Friday.
Crude was also weighed down by a stronger U.S. dollar, which firmed ahead of key January nonfarm payrolls data due on Friday. Attention was additionally focused on major central bank meetings in Europe and the UK later on Thursday.
Prices reversed some of Wednesday’s strong gains as investors locked in profits, though oil remained on track for a weekly decline after earlier losses driven by a broader selloff in commodity markets.
Brent crude futures for April slipped 1.4% to $68.50 a barrel, while West Texas Intermediate futures fell 1.3% to $63.80 a barrel by 20:42 ET (01:42 GMT).
Earlier, oil had found support from data showing U.S. inventories declined more than expected last week, as extreme cold weather disrupted production across the country.
U.S.– Iran talks are set to be held in Oman on Friday.
U.S. and Iranian officials are due to meet in Oman on Friday, as confirmed by both sides this week, though disagreements persist over the scope of the talks.
Washington has repeatedly pushed for the discussions to include Iran’s missile program, while Tehran has said it is only willing to negotiate on its nuclear activities. These differences had earlier raised doubts about whether the meeting would go ahead, a factor that helped lift oil prices earlier in the week.
Markets have also priced in a higher risk premium for crude amid concerns that U.S. President Donald Trump could follow through on threats to launch new strikes against Iran.
A stronger dollar weighs on markets as investors await central bank meetings and upcoming payrolls data.
A firmer dollar added pressure to oil prices, as the greenback attracted strong demand this week.
Expectations around interest rate decisions from the Bank of England and the European Central Bank on Thursday prompted traders to move into the dollar, while attention also remained on upcoming U.S. nonfarm payrolls data.
The dollar rebounded sharply from near four-year lows after President Donald Trump nominated Kevin Warsh as the next Federal Reserve chair, a choice seen as less dovish by markets.
Investors are now focused on January nonfarm payrolls data due on Friday, which is expected to provide clearer signals on the future path of U.S. interest rates.
Oil prices climbed sharply during Asian trading on Wednesday, driven by reports of escalating tensions between the United States and Iran, which heightened fears of possible supply disruptions in the Middle East.
Crude prices also found support from industry figures showing an unexpected and substantial drawdown in U.S. oil inventories last week, as severe cold weather across the country curtailed production.
April Brent futures advanced 1.2% to $68.15 per barrel, while U.S. West Texas Intermediate crude rose 1.4% to $63.69 per barrel as of 21:01 ET (02:01 GMT).
Overnight reports indicated that U.S. forces shot down an Iranian drone that was approaching a U.S. aircraft carrier in the Arabian Sea.
In a separate incident, several Iranian gunboats were observed nearing a U.S.-flagged oil tanker in the Strait of Hormuz.
These developments came just ahead of planned talks between Washington and Tehran later this week. However, Iranian officials have reportedly insisted that the negotiations—scheduled for Friday—be limited to bilateral discussions focused solely on nuclear issues, raising uncertainty over whether the talks will proceed at all.
U.S. President Donald Trump has warned of further military action if Iran fails to comply with U.S. demands to rein in its nuclear program, while Tehran has vowed strong retaliation against any U.S. aggression.
Any escalation of military activity in the Middle East could potentially disrupt regional oil supplies, a risk that has helped support crude prices in recent trading sessions.
U.S. oil inventories fall sharply amid production disruptions, API data shows
Oil prices also found support from industry figures showing a large and unexpected drawdown in U.S. crude inventories.
Data from the American Petroleum Institute indicated that U.S. stockpiles fell by 11.1 million barrels in the week ended January 30, sharply contrasting with expectations for a 0.7 million-barrel build.
API figures often signal a similar outcome in the official inventory report due later in the day.
The sizeable drawdown was driven by severe cold weather across the United States, which disrupted oil production nationwide and hampered exports from the Gulf Coast.
Supply disruptions in the U.S. have also contributed to stronger oil prices in recent weeks.
Oil prices slid sharply in Asian trading on Monday after reports of talks between the U.S. and Iran reduced some of the geopolitical risk premium in crude, while traders also took profits following recent gains.
The decline came after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) kept output levels unchanged at a weekend meeting, in line with expectations.
Brent crude futures for April delivery plunged 3.3% to $67.07 a barrel by 20:31 ET (01:31 GMT).
Oil had climbed to near six-month highs last week amid fears of increased U.S. military action against Iran, while severe cold weather in North America was also seen as a threat to supply. However, prices came under pressure on Monday as traders moved to lock in profits.
Crude was further weighed down by a rebound in the U.S. dollar from recent four-year lows, after the greenback strengthened following President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair.
Trump says Iran is in “serious talks” with the U.S.
U.S. President Donald Trump said over the weekend that Iran was engaged in “serious talks” with his administration, raising the prospect of a possible easing of tensions between the two countries.
His remarks followed statements from Iranian officials indicating that preparations were underway for negotiations with Washington.
Trump has repeatedly warned of potential military action against Iran amid disputes over its nuclear program and domestic unrest, and has ordered the deployment of U.S. naval forces to the Middle East.
The move heightened fears of renewed U.S. strikes on Iran, raising the risk of further geopolitical instability in the Middle East and potential disruptions to regional oil supply. Crude prices surged as markets factored in a higher geopolitical risk premium.
Escalating tensions, alongside recent weather-related disruptions in the United States, helped lift oil prices despite lingering concerns over weak global demand and the possibility of an oversupplied market in 2026.
More recently, a significant production outage in Kazakhstan has also provided support to oil prices.
OPEC+ keeps output levels unchanged
OPEC+ on Sunday kept its oil output for March unchanged, reinforcing its decision to pause further production increases despite a recent rise in crude prices.
The group has raised output by roughly 2.9 million barrels per day through 2025, but announced an open-ended halt to additional hikes in November, after oil prices fell by around 20% over the past year.
OPEC+ also offered no forward guidance on production, likely reflecting elevated uncertainty surrounding the global economic outlook and ongoing geopolitical risks.
WTI prices slipped but were still on course for roughly 12% monthly gains, underpinned by elevated geopolitical risk premiums.
Iran warned of an unprecedented response following renewed threats from President Trump over nuclear negotiations.
Meanwhile, the Trump administration loosened some sanctions on Venezuela’s oil sector on Thursday to attract U.S. investment.
West Texas Intermediate (WTI) crude edged lower after three consecutive sessions of gains, trading near $64.00 a barrel during Asian hours on Friday. Still, the benchmark remained on track for about a 12% monthly increase, supported by a strengthening geopolitical risk premium.
Geopolitical tensions stayed elevated after Iran warned it would “defend itself and respond like never before” following renewed threats from U.S. President Donald Trump, who urged Tehran to engage in nuclear negotiations. Iranian officials cautioned that any provocation would be met with retaliation.
Tensions escalated further after the European Union designated Iran’s Islamic Revolutionary Guard Corps as a terrorist organization. Concerns were compounded by reports that the United States was bolstering its military presence near Iran, while Tehran announced live-fire military exercises in the strategically vital Strait of Hormuz, heightening worries over regional security.
Markets are closely watching the potential impact of these developments on shipping through the Strait of Hormuz, a critical chokepoint between Iran and the Arabian Peninsula that handles daily flows of crude oil and LNG. According to Dow Jones Newswires, Westpac Strategy Group warned that any regime change in Iran would likely be disorderly, unlike the U.S-backed removal of Venezuela’s Nicolas Maduro or targeted strikes such as those on Fordow.
Separately, the Trump administration eased certain sanctions on Venezuela’s oil sector on Thursday to attract U.S. investment following President Nicolas Maduro’s removal earlier this month. The U.S. Treasury authorized transactions involving Venezuela’s government and state-run PDVSA, allowing U.S. firms to produce, transport, sell, and refine Venezuelan crude.
Earlier this month, oil prices also drew support from supply disruptions in Kazakhstan, freeze-offs in the United States, and tighter U.S. restrictions on Russian oil purchases, helping underpin prices this year despite lingering expectations of global oversupply.
Economic behavior refers to the way individuals, households, businesses, or organizations make decisions and take actions related to the production, distribution, exchange, and consumption of economic resources such as money, time, labor, and natural resources.
Simply put, it is how people choose when resources are limited but needs are unlimited.
Key characteristics of economic behavior
1. Based on choice
Because resources are scarce, people must choose one option over another.
2. Benefit-oriented
Decisions usually aim to maximize benefits (profit, satisfaction) and minimize costs.
3. Influenced by many factors
Income and prices
Information and expectations
Psychology, habits, and culture
Government policies and the social environment
4. Not always perfectly rational
Behavioral economics shows that people often make decisions influenced by emotions, cognitive biases, or personal beliefs.
Examples of economic behavior
Consumers compare prices and quality before buying tea
Businesses expand production when demand increases
Investors choose gold as a safe-haven asset during market volatility
People save more when they fear an economic downturn
Types of economic behavior
Consumption behavior
Consumption behavior refers to how individuals or households decide what goods and services to buy, how much to buy, and when to buy in order to satisfy their needs and wants.
President Donald Trump once again surprised markets by announcing an increase in tariffs on South Korea to 25% from 15%, citing Seoul’s failure to implement a trade agreement reached last July. The move targets sectors such as autos, lumber, and pharmaceuticals, yet South Korean equities ended up surging 2% to fresh record highs. The KOSPI initially slid more than 1%, but the dip quickly attracted buyers seeking exposure to Asia’s strongest-performing equity market of 2025.
With South Korea’s industry minister set to travel to Washington, investors appear to be betting on a negotiated climbdown, reviving the popular “TACO” trade—Trump Always Chickens Out. Few are surprised that Seoul has been reluctant to commit massive U.S. investments while the risk of abrupt tariff threats remains a defining feature of the administration.
Tariff uncertainty also boosted demand for precious metals, pushing gold and silver back toward record levels. Gold rose 1% to $5,063 an ounce, while silver jumped 5% to $109 an ounce.
Asian equities were broadly firmer, supported by optimism that blockbuster earnings from the U.S. “Magnificent Seven,” beginning with Meta, Microsoft and Tesla later this week, will help sustain the global equity rally into 2026. MSCI’s Asia-Pacific index excluding Japan climbed 1% to a new high, while Japan’s Nikkei added 0.7%, even as the yen hovered near a two-month peak—normally a headwind for exporters.
European equities are poised for a firmer open, with EURO STOXX 50 futures up 0.3%. U.S. futures are also higher, as Nasdaq futures climb nearly 0.6% and S&P 500 futures rise 0.3%. The global economic calendar remains relatively quiet ahead of Wednesday’s Federal Reserve policy decision, at which interest rates are widely expected to be left unchanged. Nevertheless, the meeting is likely to be dominated by the Justice Department’s investigation into Fed Chair Jerome Powell, adding extra scrutiny to his post-meeting press conference. Any indication that Powell may choose to remain on the Fed’s board after his term ends in May—a move permitted under Fed rules—could provoke an unpredictable reaction from President Trump.
Gold prices climbed to an all-time high during Asian trading on Friday, edging closer to the widely monitored $5,000-per-ounce mark after U.S. President Donald Trump said American ships had been deployed toward Iran, boosting demand for safe-haven assets.
Silver and platinum also reached record levels on Friday. Although precious metals eased slightly after Trump announced a trade agreement involving Greenland, continued uncertainty over the deal and heightened tensions with Iran sustained investor demand for safe havens.
Spot gold climbed as much as 0.7% to a new record of $4,967.48 an ounce, while February gold futures advanced more than 1% to $4,969.69 per ounce.
Spot silver surged almost 3% to an all-time high of $99.0275, and spot platinum gained nearly 1% to reach a record peak of $2,692.31 per ounce.
Trump says a large U.S. naval “armada” is being sent toward Iran as tensions escalate
Speaking to reporters aboard Air Force One on Thursday night, Trump said the United States had dispatched a naval fleet toward Iran, warning Tehran against harming protesters or resuming its nuclear program.
“We have an armada moving in that direction, and hopefully it won’t need to be used,” Trump said, adding that he would prefer to avoid any escalation. According to reports, a U.S. aircraft carrier along with several destroyers is expected to arrive in the Middle East in the coming days.
Earlier in January, Trump had warned Tehran against the killing of protesters as Iran faced nationwide demonstrations against the Nezam.
However, although he later softened his tone toward Iran, Trump’s remarks on Thursday reignited concerns about the possibility of U.S. military intervention in the Middle East.
Gold and metals post strong start to 2026
Metal markets surged through January as escalating geopolitical risks drove investors toward physical safe-haven assets. A U.S. military move into Venezuela early in the year, along with Trump’s threats related to Greenland, boosted demand for low-risk investments.
So far in 2026, spot gold has risen nearly 15%, while silver has jumped close to 39% and platinum has gained about 21%.
A weaker U.S. dollar has also supported metal prices, as mixed economic signals fueled expectations that the Federal Reserve will cut interest rates later this year. The Fed is set to meet next week and is widely expected to keep rates unchanged for now.
Trump’s criticism of the Fed further lifted safe-haven demand, alongside growing concerns about worsening fiscal conditions in developed economies, particularly Japan. Sharp sell-offs in Japanese and U.S. government bonds in recent weeks have prompted investors to rotate into gold.
Geopolitical tensions are rising as President Trump moves ahead with threats to levy tariffs on eight NATO allies while continuing his push regarding Greenland. Although overall markets have weakened, these frictions may spur higher defense budgets, accelerated resource reshoring, and expanded infrastructure investment. Below, we identify five U.S.-based companies that stand to gain from the intensifying U.S.–NATO standoff.
As tensions between the U.S. and NATO escalate over fresh tariffs and Greenland’s strategic resource base, defense, mining, and industrial shares appear well positioned for a strong upswing. Against this backdrop, five companies stand out—Lockheed Martin (NYSE:LMT), RTX (NYSE:RTX), Critical Metals (NASDAQ:CRML), Teck Resources (NYSE:TECK), and Caterpillar (NYSE:CAT). Each is set to benefit from increased U.S. defense spending, intensifying competition for Arctic resources, and ongoing efforts to shift supply chains away from Europe and China.
Lockheed Martin: A Leader in Arctic Defense Capabilities
Lockheed Martin appears to be among the primary beneficiaries of rising U.S.–NATO tensions, particularly as Greenland’s strategic value elevates the need for enhanced Arctic defense capabilities. The company’s advanced military platforms and surveillance systems are well suited to the region’s demanding operational environment.
Its F-35 fighter aircraft, along with missile defense and radar solutions such as the “Golden Dome,” play a central role in Arctic security, where Greenland’s geographic position strengthens U.S. monitoring capacity and deterrence against potential Russian and Chinese advances.
So far in 2026, Lockheed Martin’s shares are up roughly 19% year to date, supported by President Trump’s proposed $1.5 trillion defense budget for 2027, which points to expanded procurement activity. In periods of sustained geopolitical strain, investors typically favor companies with stable revenues and long-term contracts. Against this backdrop, Lockheed’s robust order backlog, strong free cash flow generation, and reliable dividend profile position it as a traditional “geopolitical hedge” stock.
RTX: Rising Demand Across Aerospace and Missile Systems
RTX, formerly known as Raytheon, stands out as a key beneficiary due to its broad defense technology portfolio tailored to the demanding requirements of Arctic environments. The company’s missile defense and advanced radar solutions are central to securing and monitoring strategically vital regions such as Greenland.
In particular, RTX’s Patriot missile defense system is regaining prominence as governments prioritize battle-tested platforms capable of operating in extreme climates while defending against increasingly sophisticated threats.
RTX shares are up about 7% year to date in 2026, following a strong 60% advance in 2025, with a record backlog of $251 billion underpinning continued momentum.
Looking ahead through the rest of 2026, RTX remains attractive amid rising orders from the Middle East, its inclusion in leading defense-focused ETFs, and expectations for roughly 20% earnings growth.
Critical Metals controls the Tanbreez project in Greenland, the largest non-Chinese rare earth deposit globally, directly linking the company to U.S. strategic resource objectives. Heightened geopolitical tensions could accelerate Washington’s push to secure access to these materials, which are essential for defense systems, missile technologies, and electric vehicles—reducing reliance on China and enhancing CRML’s strategic importance.
In addition, the company’s proprietary rare earth processing capabilities and its focus on North American operations position it to benefit from government initiatives aimed at strengthening domestic critical-materials supply chains and expanding strategic mineral stockpiles.
CRML shares have surged nearly 150% so far in 2026, propelled by strong high-grade drilling results and regulatory approval for its pilot processing plant in Greenland.
While the stock carries elevated risk, it offers substantial upside potential this year, with the possibility of capturing up to 50% of the Western rare earth supply. Despite ongoing volatility, secured offtake agreements and heightened U.S. national security priorities support the bullish case, with the stock still trading at an estimated 22% discount to net present value.
Teck Resources: A Global Metals and Mining Leader
Teck Resources is a leading diversified mining company with significant exposure to steelmaking coal, copper, zinc, and other essential industrial metals. While its operations are not exclusively Arctic-centric, Teck’s asset base firmly places it within the strategic raw materials space that underpins infrastructure development, defense manufacturing, and the global energy transition.
Should 2026 be marked by robust commodity demand, sustained decarbonization spending, and intensifying geopolitical rivalry, diversified miners such as Teck are well positioned to benefit from favorable pricing dynamics and rising shipment volumes.
TECK shares are up roughly 5% year to date, notching fresh 52-week highs as copper prices rally and investors rotate into the materials sector.
Looking ahead, Teck presents a compelling copper-focused opportunity, with its merger with Anglo American set to create a top-five global producer, unlock an estimated $800 million in synergies, and benefit from AI-driven demand growth. Analyst price targets in the $80–90 range are underpinned by structural supply constraints and sustained long-term commodity demand.
Caterpillar – Infrastructure & Arctic Expansion
Caterpillar stands out as a key beneficiary through its portfolio of heavy machinery and construction equipment critical to Arctic infrastructure expansion, including military installations, transportation networks, and mining projects.
Its specialized cold-weather and Arctic-rated equipment gives Caterpillar a distinct advantage in supporting development across Greenland and other high-latitude regions that gain strategic relevance amid heightened geopolitical tensions.
CAT shares are up roughly 10% year to date in 2026, building on a strong 58% gain in 2025, supported by a record backlog of $39.9 billion.
Looking ahead, Caterpillar remains a solid hold for 2026, with earnings per share projected to grow about 20.5%, aided by continued spending under the U.S. Infrastructure Act and expanding construction tied to AI-driven data center development.
Roughly $700 billion is the price tag now being discussed for a potential acquisition of Greenland, according to recent reports.
Skepticism is warranted. A transaction of that magnitude seems highly unlikely, particularly given that it would exceed half of the U.S. Defense Department’s entire 2024 budget. Public sentiment also appears far from supportive, despite President Donald Trump’s assertion that “anything less than full U.S. control of Greenland is unacceptable.”
Polling suggests little domestic support in the United States for the idea, whether pursued diplomatically or by force. A recent YouGov survey found that just 13% of Americans support compensating Greenland’s residents to join the U.S., while only 8% favor acquiring the island through military means.
Sentiment in Greenland is similarly resistant, with an overwhelming majority unwilling to leave the Danish realm, and opposition across Europe—particularly in Denmark—remains firm.
That said, dismissing Greenland’s significance altogether would be a mistake.
Why Greenland Matters—Even Without a Sale
Positioned between North America, Europe, and Russia, Greenland hosts the Pituffik Space Base, a critical site where the U.S. Space Force monitors potential threats traversing the Arctic and the North Pole.
This role has grown increasingly significant as Arctic ice continues to recede. Satellite data show that summer sea ice has been declining by more than 12% per decade—roughly 33% since 1984—opening new shipping routes and reshaping both military and commercial dynamics. As I noted last year, the Arctic is becoming not only more accessible, but also more investable.
Denmark clearly recognizes Greenland’s growing importance. The kingdom has pledged more than $4 billion toward Arctic and North Atlantic defense through 2033, coordinating closely with NATO allies. Danish and allied air, naval, and ground forces are increasing their presence on and around the island, with exercises focused on protecting critical infrastructure and conducting fighter operations in Arctic conditions. At the same time, Denmark’s Chief of Army Command, Peter Boysen, has openly discussed the need for a stronger boots-on-the-ground posture.
The Tough Realities of Developing Greenland
Greenland’s resource base adds another layer of significance. The island holds substantial deposits of iron ore, copper, zinc, graphite, tungsten, and other minerals.
Most attention, however, centers on rare earth elements (REEs)—critical materials used in technologies ranging from smartphones and fighter jets to missile guidance systems. According to the Center for Strategic and International Studies (CSIS), Greenland currently ranks eighth worldwide in proven rare earth reserves, with the potential to climb higher as exploration continues.
From a miner’s perspective, the resource potential looks compelling. In reality, however, development would be slow, complex, and highly capital-intensive.
Greenland spans an area roughly three times the size of Texas, yet it has fewer than 100 miles of roads—and none connect one town to another. Energy infrastructure is sparse, transportation costs are steep, and many mineral deposits are associated with uranium, which Greenland prohibited from mining in 2021 following strong local opposition.
In this sense, Greenland is often mischaracterized in much the same way as Venezuela. Both are portrayed as resource-rich prizes ready for rapid exploitation—rare earths in Greenland’s case, oil in Venezuela’s—but the reality is that unlocking these assets would require billions of dollars and many years of sustained investment. Illustrating the challenge, Wood Mackenzie notes that only 25 hydrocarbon exploration wells have ever been drilled in Greenland, none of which have resulted in commercial success. Neither region should be viewed as a quick path to easy riches.
China’s Efforts to Establish a Presence in Greenland Have Fallen Short
China is well aware of Greenland’s strategic and resource significance. Over the past decade, Beijing has sought to establish a presence through airport construction proposals, infrastructure investments, scientific research initiatives, and other channels.
Most of these efforts, however, have been blocked on national security grounds by either Denmark or the United States. In 2016, for example, a Chinese mining firm’s attempt to purchase a former U.S. naval base in Greenland was stopped. Two years later, China’s state-owned China Communications Construction Company (CCCC) pursued a $550 million contract to expand several Greenlandic airports, but then–U.S. Secretary of Defense James Mattis successfully urged Denmark to withdraw the bid.
So What’s Driving Trump’s Interest in Greenland?
Having said all that, why does President Trump want Greenland so badly (other than as retribution for not being awarded the Nobel Peace Prize)?
He insists it’s for national security, but, as I mentioned earlier, the U.S. military already has broad access to the island, as spelled out in the 1951 agreement signed by the U.S. and Denmark.
Further, Greenland is under the protection of NATO, of which the U.S. is a member. If Russia or China tried to attack it, Article 5 of the treaty would be triggered, activating NATO forces.
Recent reporting suggests that some of Trump’s wealthiest backers see Greenland not as a military outpost or mining play, but as a blank slate. According to Reuters, influential tech investors—including Peter Thiel and Marc Andreessen—have pitched the idea of turning parts of Greenland into a so-called “freedom city,” offering a low-regulation, quasi-autonomous hub for next-gen technologies.
Another explanation? Trump’s reaffirmation of the Monroe Doctrine, which the White House has dubbed the “Trump Corollary” or “Donroe” Doctrine. As stated in the president’s December 2 proclamation, the “American people—not foreign nations nor globalist institutions—will always control their own destiny” in the Western Hemisphere. Denmark, notably, sits in the Eastern Hemisphere.
Japan’s Gold Reserves Reach a New Record High
To conclude, central banks worldwide continue to accumulate gold as a means of supporting their currencies and reducing reliance on the U.S. dollar.
While emerging markets have driven the bulk of gold purchases over the past decade, several advanced economies have also increased their holdings. According to The Kobeissi Letter, Japan’s gold reserves reached a new record in 2025, rising to approximately $120 billion—an increase of roughly 60% compared with the previous year.
According to data from the World Gold Council (WGC), Japan now holds the world’s ninth-largest gold reserves, excluding the International Monetary Fund.
As I’ve noted previously, the actions of major institutions underscore a clear recognition of the value of hard assets like gold. For that reason, I continue to advocate allocating around 10% of a portfolio to gold, divided evenly between physical bullion and high-quality gold mining equities, with positions rebalanced annually.
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WTI crude prices edged lower to around $59.25 in early European trading on Tuesday.
Tensions surrounding Iran have eased in recent days following earlier speculation about a potential U.S. attack.
Market attention is now turning to developments around Greenland after President Trump threatened to escalate tariffs on eight European countries.
West Texas Intermediate (WTI), the U.S. crude oil benchmark, was trading near $59.25 during early European hours on Tuesday. Prices edged lower as concerns over supply disruptions from Iran eased, while traders continued to assess the implications of the U.S. push to take control of Greenland.
There were no signs of escalating tensions in Iran over the weekend, although Supreme Leader Ayatollah Ali Khamenei said that 5,000 people were killed in anti-government protests this month, according to Reuters. The easing of tensions has reduced the risk of a potential U.S. attack that could disrupt supplies from a major OPEC producer, weighing on WTI prices.
Traders are turning their focus to the Greenland crisis after U.S. President Donald Trump said on Saturday that Washington would impose an additional 10% import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and the United Kingdom until the U.S. is permitted to purchase Greenland.
Trump is expected to discuss Greenland at the World Economic Forum in Davos, Switzerland, on Wednesday, while European Union leaders are set to hold an emergency summit in Brussels on Thursday. Concerns that tensions could escalate into a broader U.S.–EU trade war have weighed on market sentiment and may add selling pressure to oil prices.
“With fears around Iran easing in recent days following rumors of a U.S. attack, market attention has shifted to the Greenland issue and the potential depth of any fallout between the U.S. and Europe, as an expanded trade conflict could weigh on demand,” said Janiv Shah, an analyst at Rystad.
Meanwhile, the American Petroleum Institute’s (API) crude inventory report is due later on Tuesday. A larger-than-expected draw could signal stronger demand and support WTI prices, while a bigger-than-forecast build would point to weaker demand or oversupply, potentially pressuring prices lower.
Few analysts had a U.S. invasion of Greenland anywhere near the top of their 2026 market outlooks. President Trump’s surprise weekend tariff move has triggered a classic risk-off reaction, with gold rallying around 2%, equities down 1.0–1.5%, and the dollar coming under modest pressure. This week’s World Economic Forum in Davos is now set to become a focal point for U.S.–European diplomacy, with elevated FX volatility likely.
USD: Too Early to Embrace the ‘Sell America’ Narrative
Washington escalated its pursuit of Greenland over the weekend, with the threat of 10% tariffs—potentially rising to 25%—on eight European countries appearing consistent with a broader “maximum pressure” strategy to force a deal. Political commentary in Europe suggests this could mark the end of the EU’s long-standing policy of accommodation toward the U.S., with France emerging as a key advocate for deploying the EU’s Anti-Coercion Instrument, which allows for retaliatory measures spanning tariffs, taxation, and investment restrictions against coercive trade actions.
The issue, alongside growing concerns about strains within NATO, is set to dominate the policy agenda in a week that might otherwise have focused on Ukraine. President Donald Trump is scheduled to speak at the World Economic Forum in Davos on Wednesday, followed by an EU leaders’ meeting on Thursday. A central question is whether Europe adopts China’s approach from last year—matching U.S. tariffs one-for-one—to ultimately force a de-escalation from Washington.
Initial market reactions have been cautious but telling: gold has gapped roughly 2% higher, German DAX futures are down around 1.5%, and the U.S. dollar is marginally weaker. While U.S. cash markets are closed for the Martin Luther King Jr. holiday, S&P 500 futures are indicating losses of about 0.8%. Still, it may be premature to revive the “Sell America” narrative. As with last April’s near-50% “Liberation Day” tariff threats, investors appear reluctant to chase what often proves to be aggressive rhetoric that ultimately gives way to diplomatic negotiation.
Nonetheless, these developments are likely to inject a degree of volatility into what has otherwise been a relatively calm investment environment. On the broader “Sell America” theme, we noted on Friday that there was little concrete evidence of meaningful de-dollarisation last year. Even in a scenario where geopolitical tensions were to escalate materially, it appears unlikely that the dollar would experience a sell-off on the scale of last year’s near-10% decline, particularly given that the buy-side was then unusually under-hedged in U.S. dollar exposure.
Beyond the Greenland issue, this week may also bring clarity on the future leadership of the Federal Reserve. President Trump could announce his nominee to succeed Jerome Powell as Fed Chair. The dollar rallied on Friday after reports suggested Trump wants Kevin Hassett to remain at the National Economic Council, with Kevin Warsh now viewed as the leading candidate—an outcome that would be modestly supportive for the dollar if confirmed.
Overall, U.S. economic data are likely to take a back seat to political developments in the coming days. In the near term, the dollar may probe lower levels. For DXY, gap resistance around 99.35 could cap upside, while a corrective move toward the 98.80–98.85 zone remains the mild tactical bias.
EUR: Unwelcome Developments
The renewed tensions surrounding Greenland and the prospect of fresh tariffs are particularly negative for European industry. This comes just as industrial confidence had begun to recover, with firms appearing to have adapted to last year’s tariff-related volatility. The latest developments are likely to sharpen the focus among European policymakers on boosting domestic demand and may even add momentum to long-delayed reforms such as the Savings and Investment Union, aimed at strengthening Europe’s capital markets and enhancing their competitiveness relative to the U.S.
In FX markets, EUR/USD has established support just below 1.1600. Initial intraday resistance is seen near 1.1650, with scope for a move toward the 1.1690–1.1700 area if that level is cleared. Short-dated implied volatility for EUR/USD, both one-week and one-month, has edged higher, reflecting the elevated uncertainty surrounding the week ahead.
GBP: Poised for Relative Outperformance This Week
We believe this week’s U.K. data — November employment figures and December CPI — may offer modest support to sterling, potentially extending the short-covering rally that has been underway since late November. While EUR/GBP was initially seen as the more vulnerable cross, with downside risks toward 0.8600, early-week dollar softness could shift the bulk of the move into GBP/USD. A sustained break above the 1.3415–1.3420 zone would open scope for a move toward 1.3450–1.3460.
That said, sterling historically underperforms during pronounced risk-off phases, and the current environment remains fluid with multiple cross-currents at play.
Futures tied to major U.S. stock indexes fell after President Donald Trump raised the prospect of imposing tariffs as part of his push to acquire Greenland. European leaders discussed possible retaliation against the measures, which they described as a form of blackmail. Gold climbed to a fresh record high, while oil prices edged lower as traders assessed Trump’s remarks and the EU’s response. Elsewhere, China’s economic growth slowed in the fourth quarter but still met Beijing’s 2025 target.
U.S. futures and global stocks decline
U.S. stock futures pointed lower on Monday as investors weighed President Donald Trump’s threat to impose tariffs on several European countries until the United States is allowed to acquire Greenland.
By 03:05 ET (08:05 GMT), Dow futures were down 404 points, or 0.8%, S&P 500 futures had fallen 66 points, or 1.0%, and Nasdaq 100 futures were off 336 points, or 1.3%.
With U.S. cash markets closed for the Martin Luther King Jr. Day holiday, the immediate reaction to Trump’s latest tariff threat will be delayed. Risk-off sentiment has spread globally, dragging equities lower across Europe and Asia.
ING analysts said Trump’s comments, following last year’s sweeping global tariffs, have pushed trade tensions into “an entirely new dimension,” driven less by economic considerations and more by political motives. They added that while past experience suggests caution in reacting to dramatic announcements, some of Trump’s threats over the past year have ultimately been carried out.
Focus on Trump’s Greenland tariffs
European leaders agreed on Sunday to intensify efforts to counter President Donald Trump’s tariff threats, with reports suggesting EU officials are considering strong retaliatory measures if the levies are imposed.
On Saturday, Trump said he would introduce 10% tariffs on exports from eight European countries—Denmark, Sweden, France, Germany, the Netherlands, Finland, Norway and the United Kingdom—until the United States is able to acquire Greenland. He added that the tariffs would be raised to 25% if the purchase of the semi-autonomous Danish territory does not go ahead. Trump has framed the move as a national security necessity, a claim European governments have rejected, describing it as blackmail.
Ahead of an emergency EU summit in Brussels on Thursday, member states are expected to debate a range of responses, including a potential €93 billion tariff package on U.S. imports and the possible use of the bloc’s “Anti-Coercion Instrument,” which could restrict U.S. access to investment, banking and services markets. Reuters, citing an EU source, reported that the tariff package currently has broader backing.
Trump’s latest tariff threat has also cast doubt over the future of a U.S.–EU trade agreement reached last year, with EU officials saying they cannot approve the deal while Washington pursues control of Greenland. ING analysts said that while the outcome of the dispute remains uncertain, it underscores the lack of predictability in global trade and tariff policy.
Gold reaches record high
Gold prices climbed to record highs in Asian trade on Monday, nearing $4,700 an ounce, as investors rushed into safe-haven assets following President Trump’s latest tariff threat.
Spot gold rose 1.6% to $4,667.33 an ounce by 02:26 ET (07:26 GMT), after earlier touching a record $4,690.75. U.S. gold futures also hit a new peak at $4,697.71 an ounce.
Silver prices surged more than 4% to a fresh all-time high of $94.03 an ounce, supported by safe-haven demand as well as its role as an industrial metal.
Oil prices edge lower
Oil prices edged lower, giving back part of last week’s gains as markets weighed the growing risk of a trade dispute linked to Greenland. Brent crude slipped 0.1% to $59.74 a barrel, while U.S. West Texas Intermediate fell 0.1% to $55.95.
Crude had rallied early last week on concerns that unrest in Iran could threaten oil supplies from the Middle East, a region that accounts for a significant share of global output. Much of that risk premium faded after President Trump ruled out immediate U.S. military action, leading prices to pull back before stabilizing toward the end of the week.
China’s economy meets 2025 growth target
China’s economy grew slightly more than expected in the fourth quarter of 2025, data released on Monday showed, as policy stimulus and a pickup in consumption helped the country meet its annual growth target.
Gross domestic product rose 4.5% year on year in the October–December period, in line with forecasts but down from 4.8% in the previous quarter, marking the slowest pace in three years. On a quarter-on-quarter basis, GDP expanded 1.2%, marginally above expectations of 1.1%.
The result brought full-year 2025 growth to 5%, meeting Beijing’s target. The government is widely expected to set a similar 5% growth goal again, as it continues to face heightened U.S. trade tensions, weak consumer demand and a prolonged property sector downturn.
European stocks dropped sharply on Monday after U.S. President Donald Trump threatened to impose economic sanctions on several countries in the region if they resist his plans to acquire Greenland.
By 03:05 ET (08:05 GMT), Germany’s DAX was down 1.3%, France’s CAC 40 fell 1.6% and Britain’s FTSE 100 slipped 0.4%.
Tariff threats dampen market sentiment
President Donald Trump said over the weekend that he plans to impose tariffs on exports to the United States from eight European countries that have opposed his proposal for the U.S. to acquire Greenland. The countries affected include France, Germany and the United Kingdom, along with several Nordic and northern European nations.
Trump said an initial 10% tariff would be introduced on Feb. 1, rising to 25% in June if no agreement is reached allowing the United States to take control of Greenland, the semi-autonomous territory of Denmark.
The European Union has already suspended ratification of a U.S.–EU trade agreement, and media reports indicate the bloc may revive a €93 billion tariff package targeting U.S. goods. Such a move could sharply escalate tensions and increase the risk of a wider transatlantic trade conflict.
According to IG market analyst Tony Sycamore, the latest dispute has intensified fears of NATO fragmentation and the breakdown of last year’s trade accords with European partners, pushing investors toward risk-off positioning in equities while boosting demand for safe havens such as gold and silver.
This has put the World Economic Forum, which gets under way later in the session in Davos, squarely in focus as global leaders convene, including a large U.S. delegation led by President Trump.
Euro zone inflation data due
Monday’s key economic event is the release of December eurozone inflation data, particularly with U.S. markets closed for the Martin Luther King Jr. holiday. Annual eurozone CPI is expected to come in at 2.0% in December, matching the European Central Bank’s target for the first time since mid-2025, down from 2.1% in November.
The ECB has left interest rates unchanged since ending its rate-cut cycle in June and signalled last month that it is under no immediate pressure to adjust policy, as inflation concerns have eased and growth surprised on the upside toward the end of 2025. The ECB’s next policy meeting is scheduled for early February.
Earlier data showed China’s economic growth slowed to a three-year low in the fourth quarter, with GDP expanding 4.5% year on year, compared with 4.8% in the previous quarter.
U.S. tech giants in focus
The European corporate earnings calendar is thin, though UK building products group Marshalls reported full-year 2025 adjusted profit before tax in line with market expectations despite ongoing uncertainty in its end markets.
U.S. technology heavyweights listed in Europe will also be in focus, as they could become targets of retaliatory measures by European authorities if President Trump follows through on tariff threats against European countries until the U.S. is permitted to acquire Greenland.
Crude slips lower
Oil prices edged lower on Monday, giving back part of the previous week’s gains as markets weighed the growing risk of a trade dispute linked to Greenland. Brent crude slipped 0.1% to $59.74 a barrel, while U.S. West Texas Intermediate fell 0.1% to $55.95.
Prices had climbed early last week on concerns that unrest in Iran could threaten oil supplies from the Middle East, a region that represents a large share of global production. However, much of that risk premium faded after President Trump said there would be no immediate U.S. military action, triggering a pullback before prices stabilized later in the week.
EUR/USD edges higher toward the 1.1625 area in early European trading on Monday, as the euro finds support from signs that Europe is prepared to respond to U.S. tariff measures.
The move follows President Donald Trump’s announcement of a 10% tariff on goods from several European countries, prompting pushback from European leaders.
Meanwhile, expectations that the Federal Reserve will keep interest rates unchanged at its January meeting—amid a resilient labor market and still-elevated inflation—have weighed on the U.S. dollar, providing additional support for the pair.
The EUR/USD pair advances to around 1.1625 in early European trading on Monday, snapping a four-day losing streak. The U.S. dollar comes under modest pressure against the euro after President Donald Trump threatened to escalate tariffs on eight European nations opposing his proposal for the United States to acquire Greenland.
U.S. markets are closed on Monday in observance of Martin Luther King Jr. Day.
Over the weekend, Trump announced a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the United Kingdom, set to take effect on February 1. He added that the levy would rise to 25% in June unless an agreement is reached allowing the U.S. to purchase Greenland.
Europe is set to respond after President Donald Trump imposed additional tariffs on key allies, with European leaders expected to convene an emergency meeting in the coming days to consider potential retaliation. Renewed concerns over a trade war and the longer-term implications of Trump’s latest move have weighed on the U.S. dollar, providing support for the EUR/USD pair.
“While one could argue the tariffs are a threat to Europe, it is actually the dollar that is absorbing most of the impact, as markets appear to be pricing in a higher political risk premium for the U.S. currency,” said Khoon Goh, head of Asia research at ANZ.
That said, stronger-than-expected U.S. labor market data released last week have delayed expectations for further Federal Reserve rate cuts until June, which could help cap downside pressure on the dollar. According to the CME FedWatch tool, markets are pricing in nearly a 95% probability that the Federal Open Market Committee will leave rates unchanged at its January 27–28, 2026 meeting.
Economic growth depends on population expansion and the formation of new households. While the idea of fewer people—less congestion, smaller crowds, and reduced strain on infrastructure—may seem appealing, the risks associated with population decline are often understated. Much like deflation, a shrinking population poses serious and potentially greater threats to long-term economic stability.
Demographers use the “total fertility rate” (TFR), defined as the average number of births per woman, as a key measure of population sustainability. A TFR of at least 2.1 is required to maintain a stable population, with the additional 0.1 accounting largely for infant mortality. Although the global TFR stood at 2.24 last year, this figure masks significant regional disparities. Excluding Africa, the global fertility rate falls well below 2.0.
In 2025, most major advanced economies reported TFRs under the replacement threshold of 2.0, underscoring the growing demographic challenge facing industrialized nations.
No major developed economy currently records a total fertility rate above the 2.1 replacement threshold. Outside of Africa, global population growth is already in decline. Historically, from 1950 to 1970, the world’s wealthiest nations averaged more than 2.7 births per woman. Since 1995, however, that figure has fallen sharply to around 1.6, reaching a record low of approximately 1.5 during the 2020–2025 period.
Globally, population growth remains marginally positive, driven largely by demographic expansion in Africa and rising life expectancy among older populations. However, Asia’s two largest economies—China and Japan—are experiencing population decline, a trend that constrains their long-term growth potential. More critically, shrinking cohorts of younger workers are increasingly unable to shoulder the financial burden of supporting aging populations that are living longer and often facing higher healthcare needs.
China has formally abandoned its long-standing one-child policy, but behavioral patterns shaped by decades of enforcement have proven difficult to reverse. Today, many young couples are reluctant to have even a single child, prioritizing career advancement and higher incomes instead. Compounding the challenge, the legacy of the policy produced severe demographic distortions. Prior to 2010, widespread prenatal sex selection—driven by the desire to raise a single male “heir” to support parents in old age—led to a significant gender imbalance, with roughly 118 male births for every 100 female births between 2002 and 2008. The result is a surplus of men and a shrinking pool of potential spouses.
In the mid-1990s, a typical Chinese household consisted of four grandparents, two parents, and one heavily relied-upon child—the so-called “young emperor.” This inverted demographic pyramid is financially unsustainable, as the burden of supporting multiple generations increasingly falls on a single income earner.
Europe faces an even steeper demographic challenge. With an average fertility rate of just 1.4 children per woman and a comparatively generous system of old-age pensions, the region confronts mounting fiscal pressure. These constraints help explain Europe’s historical reliance on the United States for security spending—a strategy that may prove risky as President Donald Trump presses European nations to assume greater responsibility for their own defense.
The United States remains in a stronger demographic position than Europe or much of Asia, in part because of its relatively effective assimilation of immigrants and higher rates of family formation in more conservative regions of the country. However, with the administration introducing tighter immigration restrictions and stepping up efforts to detain and deport undocumented workers, questions are emerging over whether there will be a sufficient supply of willing young workers to staff the growing number of factories being brought back onshore.
Another structural risk embedded in these demographic trends is the growing strain on Social Security and Medicare. These programs function as intergenerational compacts, in which today’s workers finance the retirement and rising healthcare costs of the elderly. Unlike 401(k) plans or IRAs, they are not savings vehicles but largely unfunded entitlements built on historical assumptions of higher birth rates and a broad, growing workforce.
As younger generations are increasingly less likely to marry, have children, or pursue stable, high-earning careers—instead relying more on gig-based employment—the system faces mounting pressure. These shifts raise serious concerns about the long-term sustainability of funding future benefits, particularly in a society producing fewer contributors to support the next generation of retirees.
EUR/JPY moved higher as the euro drew support from EU efforts to push back against potential U.S. tariffs on European allies.
President Donald Trump said tariffs would be imposed on eight European countries that have opposed his proposal involving Greenland.
Meanwhile, Japan’s industrial production dropped 2.7% month-on-month in November, marking its sharpest fall since January 2024.
EUR/JPY rebounded after three consecutive sessions of losses, trading near 183.60 during Asian hours on Monday. The cross found support as the euro was buoyed by reports that European Union ambassadors agreed on Sunday to intensify efforts to deter U.S. President Donald Trump from imposing tariffs on European allies, while also preparing retaliatory measures if the duties go ahead, according to diplomats.
On Saturday, Trump said he would impose tariffs on eight European countries opposing his proposal for the United States to acquire Greenland. He said a 10% levy would be applied from Feb. 1 on goods from Denmark, Sweden, France, Germany, the Netherlands and Finland, as well as Britain and Norway, until Washington is allowed to purchase Greenland, Bloomberg reported.
FILE – This July 31, 2012 file photo shows the euro sculpture in front of the headquarters of the European Central Bank, ECB, in Frankfurt, Germany. The eurozone economy has finally recouped all the ground lost in the recessions of the past eight years after official figures Friday April 29, 2016. showed that the 19-country single currency bloc expanded by a quarterly rate of 0.6 percent in the first three months of the year. (AP Photo/Michael Probst, File) ORG XMIT: LON101
Japan’s industrial production fell 2.7% month-on-month in November 2025, slightly worse than the preliminary estimate of a 2.6% decline, reversing October’s 1.5% rise and marking the steepest contraction since January 2024.
Gains in EUR/JPY could be limited as the yen finds support from expectations of Bank of Japan rate hikes and the prospect of increased fiscal spending under Prime Minister Sanae Takaichi.The BoJ is widely expected to keep its policy rate unchanged at 0.75% this week, although markets are watching for a potential move as early as June.
Last week, BoJ Governor Kazuo Ueda reiterated that the central bank stands ready to tighten policy if economic and inflation trends develop in line with its projections.
Meanwhile, Finance Minister Satsuki Katayama signaled the possibility of coordinated intervention with the United States, stressing on Friday that all options—including direct market action—remain on the table to address the yen’s recent weakness.
Canada and China reached a preliminary trade agreement on Friday to sharply reduce tariffs on electric vehicles and canola, pledging to dismantle trade barriers and deepen strategic cooperation during Prime Minister Mark Carney’s visit.
On his first trip to China since 2017 by a Canadian prime minister, Carney aims to repair relations with Canada’s second-largest trading partner after the United States, following months of diplomatic outreach.
Canada will initially permit imports of up to 49,000 Chinese electric vehicles at a 6.1% most-favoured-nation tariff, Prime Minister Mark Carney said following talks with Chinese leaders, including President Xi Jinping.
The move marks a sharp reversal from the 100% tariff imposed on Chinese EVs in 2024 under former Prime Minister Justin Trudeau, in line with similar measures taken by the United States. China shipped 41,678 electric vehicles to Canada in 2023.
“This restores access to levels seen before the recent trade disputes, but within a framework that offers significantly more benefits for Canadians,” Carney said, adding that the import quota would be expanded gradually to around 70,000 vehicles over the next five years.
“To build a globally competitive electric vehicle industry, Canada must learn from innovative partners, gain access to their supply chains, and stimulate domestic demand,” Carney said, distancing himself from former prime minister Justin Trudeau’s view that tariffs were necessary to shield local manufacturers from subsidised Chinese competitors.
Canada’s decision to ease EV tariffs runs counter to U.S. policy, drawing criticism from some members of President Donald Trump’s cabinet ahead of a planned review of the U.S.–Canada–Mexico trade agreement. However, Trump himself voiced support for Carney’s approach.
“That’s exactly what he should be doing. Signing trade deals is good for him. If you can strike a deal with China, you should take it,” Trump said at the White House.
AGRI-FOOD PARTNERSHIP: Ontario Premier Doug Ford denounces the deal.
“The federal government is effectively opening the door to a surge of low-cost Chinese-made electric vehicles without firm assurances of comparable or timely investment in Canada’s economy, auto industry, or supply chains,” Ford said in a post on X.
China imposed retaliatory tariffs in March on more than $2.6 billion worth of Canadian agricultural and food exports — including canola oil and meal — in response to tariffs introduced by Trudeau. Additional duties on canola seed followed in August.
As a result, China’s imports of Canadian goods fell by 10.4% in 2025.
Under the new agreement, Canada expects China to cut tariffs on canola seed to a combined rate of around 15% by March 1, down from 84%, Carney said. He added that discriminatory tariffs on Canadian canola meal, lobsters, crabs and peas are also expected to be lifted from March 1 through at least the end of the year.
Canadian canola futures climbed.
The agreements are expected to generate nearly $3 billion in export orders for Canadian farmers, fishers and food processors, Carney said.
China’s Ministry of Commerce said it would adjust anti-dumping duties on canola and lift anti-discrimination measures on certain Canadian agricultural and seafood products, citing Canada’s decision to lower tariffs on electric vehicles.
Carney added that President Xi Jinping had agreed in principle to grant visa-free travel for Canadians visiting China, though further details were not provided.
In a statement released by state-run Xinhua, the two countries said they would resume high-level economic and financial talks, expand trade and investment, and deepen cooperation in sectors including agriculture, oil, gas and green energy.
Carney said Canada plans to double the size of its power grid over the next 15 years, creating potential opportunities for Chinese investment, including in offshore wind projects. He also said Canada is ramping up liquefied natural gas exports to Asia, with annual production set to reach 50 million tonnes by 2030, all of which will be shipped to Asian markets.
Carney says China has become “more predictable”
Given the growing complications in Canada’s trade relationship with the United States, it is unsurprising that Carney’s government is seeking to strengthen trade and investment ties with Beijing, which offers a vast market for Canadian agricultural exports, said Even Rogers Pay of Beijing-based consultancy Trivium China.
U.S. President Donald Trump has imposed tariffs on certain Canadian goods and has even suggested that the longtime U.S. ally could become America’s 51st state. China, which has also been targeted by Trump’s tariffs, is eager to deepen cooperation with a G7 country traditionally seen as part of the U.S. sphere of influence.
Asked whether China had become a more predictable and reliable partner than the United States, Carney said recent engagement with Beijing had delivered greater clarity and tangible outcomes. “Looking at how our relationship with China has evolved in recent months, it has become more predictable, and we are seeing results from that,” he said.
Carney added that he had also discussed Greenland with President Xi Jinping, saying the two leaders found their views broadly aligned. Trump has recently revived his claim to the semi-autonomous Danish territory, prompting NATO members to push back against U.S. criticism that Greenland is insufficiently defended.
Analysts said the warming of ties between Canada and China could alter the political and economic backdrop of Sino-U.S. competition, though Ottawa is unlikely to shift decisively away from Washington.
“Canada remains a core U.S. ally and is deeply integrated into American security and intelligence systems,” said Sun Chenghao, a fellow at Tsinghua University’s Centre for International Security and Strategy. “A strategic realignment away from Washington is therefore highly unlikely.”
The recent rally in Japanese equities, sparked by Prime Minister Sanae Takaichi’s announcement of a snap election, could lose momentum if she ultimately achieves her political objectives, as increased fiscal spending risks stoking inflation and pushing up government borrowing costs.
Japan’s Topix index jumped over 4% this week, marking its strongest advance since July, as investors revived the so-called “Takaichi trade,” betting on heavier government expenditure. Takaichi is seeking to strengthen her grip on power by expanding her party’s seat count, which would give her greater latitude to pursue expansionary economic policies.
Market participants believe Takaichi could follow in the footsteps of her mentor, former Prime Minister Shinzo Abe, whose stimulus-driven Abenomics era propelled asset prices. She has identified sectors such as artificial intelligence, semiconductors, defense, space, and content industries as key targets for investment.
Although Japanese equities are once again following a familiar pattern of rallying ahead of Lower House elections, sustained upside may hinge on the specifics of Takaichi’s fiscal agenda. Meanwhile, bond investors are demanding higher yields to compensate for holding Japanese government debt, even as global bond yields ease.
“Rising break-even inflation rates suggest the market is pricing in looser, more inflationary policies after the election, with inflation staying above the Bank of Japan’s target for longer,” said Aninda Mitra, head of Asia macro and investment strategy at BNY Investments.
Economists anticipate that Japan’s consumer inflation will ease to below 2.0% this year — falling under the Bank of Japan’s target for the first time in five years — helped in part by reductions in gasoline taxes and other regulated prices.
However, the yen’s decline to a more than one-year low of 159.45 per dollar on Wednesday, and to its weakest level since 1992 on a trade-weighted basis, has reignited inflation worries. The currency’s weakness is also eroding its traditional support for exporter stocks. Pressure on the yen has intensified as Takaichi’s dovish stance on monetary policy is seen as constraining the BOJ’s ability to raise interest rates swiftly.
“The yen is the biggest risk factor for Takaichi,” said Chisa Kobayashi, Japan equity strategist at UBS SuMi TRUST Wealth Management. “Further depreciation could push inflation higher, dampen consumer spending, and eventually weaken voter backing.”
Neil Newman, head of strategy at Astris Advisory Japan, said a Takaichi election victory could drive another 5% rise in the Nikkei 225 Stock Average. “With the government planning targeted investments in strategic sectors, a surge in capital expenditure is likely,” he said.
Despite Takaichi’s strong approval ratings, which have led many investors to expect a comfortable win, some analysts are growing more cautious after Komeito — previously a junior coalition partner of the Liberal Democratic Party — shifted toward cooperation with the main opposition party.
As a result, the election outcome has become increasingly uncertain, said Shinichi Ichikawa, senior fellow at Pictet Asset Management Japan.
“The one thing that’s clear is that both camps will be compelled to campaign on bold spending promises to attract voters,” he said.
Oil prices are rising sharply, as WTI nears $62 and Brent crude moves up toward $66 per barrel. These increases highlight the market’s responsiveness to geopolitical tensions, despite no actual disruptions in supply. The question remains: where will prices go from here?
Main Highlights of WTI Crude Oil
WTI Crude Oil prices are sharply rising amid concerns that ongoing protests in Iran might escalate and impact production or disrupt the Strait of Hormuz.
However, this upward pressure is balanced by underlying fundamentals and a global surplus.
The current price around $62 is a crucial threshold: surpassing this resistance level could pave the way for a rally toward the six-month highs near $66.
In today’s trading environment, it can be difficult for market participants to isolate the key drivers of price action on a day‑to‑day basis. Beyond enduring themes like economic growth trajectories, inflation trends, the expansion of AI infrastructure, and sovereign debt pressures, fresh geopolitical tensions seem to emerge almost daily.
Amid simmering issues in places like Venezuela — and speculation about other potential flashpoints — Iran has become the dominant focus for energy markets. Nationwide protests there, sparked by severe economic strains and a collapsing currency, have raised serious questions about stability in one of the world’s most influential oil‑producing countries.
Although these demonstrations have not yet led to direct disruptions in oil output, the unrest has prompted traders to price in a growing geopolitical risk premium. Concerns about possible escalation — including the risk of broader conflict or disruption to key infrastructure such as the Strait of Hormuz, through which a large share of global seaborne oil exports transit — are contributing to recent volatility in crude prices.
As a reminder, Iran remains a key influence on global energy markets due to both its oil production capacity and its control over the Strait of Hormuz — a vital maritime chokepoint through which nearly 20 million barrels per day of crude and petroleum products transit, representing a large share of seaborne global oil flows. Any actual or perceived threat to exports or shipping through this route can have outsized impacts on pricing and risk sentiment.
Against this backdrop, oil prices have recently climbed, with Brent trading in the mid‑$60s and WTI previously approaching the $62 per barrel area, as traders price in geopolitical risk tied to the unrest in Iran. This reflects markets’ sensitivity to potential escalations, even though there have been no confirmed widespread production outages to date.
However, this upside is balanced by broader market fundamentals. Global oil inventories remain substantial, and additional output from other producers — including resumed Venezuelan exports and lingering oversupply concerns — continues to temper the rally. This backdrop helps explain why prices have fluctuated and, at times, pulled back when geopolitical anxieties ease.
Looking ahead, the future direction of crude prices is likely to hinge on developments in Iran’s domestic unrest and whether tensions translate into actual disruptions in oil production or interference with key export infrastructure such as the Strait of Hormuz. So far, most of the price appreciation has been driven by risk premium and sentiment rather than physical losses of barrels.
If broader instability were to disrupt supply routes or exports, markets could respond with a more pronounced and sustained price surge, particularly given the strategic importance of Middle East exports to the global oil system. However, short‑term moves are also currently influenced by macro factors such as inventory data and demand signals, as well as comments from policymakers that can quickly recalibrate risk perceptions.
Technical Analysis of Crude Oil: Daily Chart for WTI
Looking at the technicals, WTI Crude Oil is on a five-day winning streak, climbing from the lower end of its three-month trading range between $55 and $62 up to the upper boundary. Chart-wise, the current price level is a crucial threshold: a break above the $62 resistance — which also aligns with the 200-day moving average — could open the door for further gains toward the six-month highs around $66, where it would face resistance from the longer-term bearish trend line drawn from the second half of 2023’s peak.
Conversely, if indications emerge that the protests are easing and stability is being restored in Iran, the geopolitical risk premium currently weighing on crude prices may diminish. This could trigger a reversal, causing prices to retreat below the $60 mark. Regardless of the outcome, oil traders should closely monitor developments in Iran in the days ahead.
Gold prices declined during Asian trading on Thursday following three days of record-breaking highs, as U.S. President Donald Trump softened his position on the unrest in Iran and Federal Reserve Chair Jerome Powell eased concerns, reducing the demand for gold as a safe haven.
Spot gold was last down 0.8% at $4,588.55 per ounce by 23:04 ET (04:04 GMT), while U.S. Gold Futures fell 0.3% to $34,594.10. In the previous session, gold reached a record peak of $4,642.72 per ounce.
Other precious metals experienced even sharper drops, with silver plunging nearly 6% to $87.74 per ounce and platinum prices falling 4% to $2,309.52 per ounce.
Gold retreats from highs as Trump adopts a milder approach toward Iran
The precious metal had climbed to consecutive record highs amid concerns that escalating unrest in Iran might provoke U.S. military intervention and destabilize the Middle East, along with worries about political pressure on the U.S. Federal Reserve.
Those fears subsided after President Trump indicated a softer approach toward Iran. He stated that he was reassured Iranian authorities would cease killing protesters and expressed his belief that there were no plans for large-scale executions at this time.
His remarks lowered the chances of an immediate U.S. military response to the protests against the government of Supreme Leader Ayatollah Ali Khamenei, easing the geopolitical tensions that had driven gold’s recent surge.
Trump states there is no intention to dismiss Fed Chair Powell.
Gold prices also came under pressure after Trump attempted to ease worries about the Federal Reserve. In an interview with Reuters, he stated that he had no plans to remove Federal Reserve Chair Jerome Powell, despite ongoing investigations, which helped to alleviate investor concerns about the independence of U.S. monetary policy.
The recent decline in gold was partly due to profit-taking following its rapid rise, which pushed prices well beyond key technical levels.
Despite Thursday’s drop, gold remained supported by expectations of U.S. interest rate cuts later this year, ongoing geopolitical tensions, and robust central bank purchases.
Lower interest rates generally benefit gold by decreasing the opportunity cost of holding a non-yielding asset.
China’s trade surplus widened in December, reaching CNY 808.80 billion, up from CNY 792.57 billion the previous month.
Exports grew 5.2% year-over-year in December, slightly lower than November’s 5.7% increase. Meanwhile, imports rose 4.4% year-over-year, accelerating from the 1.7% growth recorded in November.
In U.S. dollar terms, China’s trade surplus exceeded expectations, registering $114.10 billion compared to the forecasted $113.60 billion and $111.68 billion in the prior month. Exports increased 6.6% year-over-year, well above the 3.0% forecast and 5.9% last month. Imports also rose strongly by 5.7%, surpassing the anticipated 0.9% growth and previous 1.9% figure.
Market Reaction to China’s Trade Balance Data
AUD/USD continued its upward momentum, trading near 0.6692 shortly after the release of China’s trade data. The pair is currently up 0.16% on the day.
This section was released on Wednesday at 00:52 GMT as a preview ahead of China’s Trade Balance report.
China’s Trade Balance Overview
The General Administration of Customs is scheduled to release December trade data on Wednesday at 03:00 GMT. Analysts expect the trade surplus to widen to $113.60 billion, up from $111.68 billion previously. Exports are forecasted to grow 3.0% year-over-year in December, while imports are projected to rise 0.9% over the same period.
Given China’s significant influence on the global economy, this data release is anticipated to impact the Forex market.
In what ways can China’s Trade Balance impact the AUD/USD exchange rate?
AUD/USD is trading with modest gains ahead of China’s Trade Balance release. The pair dipped slightly as the U.S. dollar strengthened, supported by Consumer Price Index (CPI) inflation data that largely met economists’ expectations last month.
Should the trade data exceed forecasts, it may boost the Australian dollar, with initial resistance seen at the January 12 high of 0.6722. Further upside targets include the January 6 high at 0.6742 and the January 7 peak at 0.6766.
On the downside, the January 9 low of 0.6663 could provide support for buyers. A deeper decline might push the pair down to the December 4 low of 0.6614, followed by the 100-day exponential moving average near 0.6587.
WTI prices rise amid growing supply concerns linked to escalating unrest in Iran.
President Trump has warned Tehran against using force on protesters, while Iran has warned the U.S. and Israel against any intervention.
However, oil price gains may be capped due to anticipated resumption of Venezuelan exports and forecasts of a potential market oversupply.
West Texas Intermediate (WTI) crude extended its gains for a third consecutive session, trading around $59.10 per barrel during Asian hours on Monday. The rise in oil prices is driven by growing supply concerns amid escalating protests in Iran. As OPEC’s fourth-largest producer, exporting nearly 2 million barrels per day, any conflict escalation poses a significant risk to global supply.
The unrest, now in its third week and having reportedly resulted in hundreds of casualties, has prompted Iranian authorities to signal a harsher crackdown. Meanwhile, U.S. President Donald Trump warned Tehran against using force on protesters and suggested possible intervention if the situation worsens, while Iranian officials cautioned against any U.S. or Israeli involvement.
Oil price gains may be restrained by expectations that Venezuelan crude exports could resume following political changes in the country, with the U.S. poised to receive or manage up to 50 million barrels of sanctioned oil under a new arrangement with interim authorities. This potential influx of supply has tempered some of the upside from geopolitical risk.
However, uncertainty remains over the timing and scale of Venezuelan shipments, as shifting U.S. policy and the logistics of restarting exports from dilapidated ports and vessels cloud the outlook for actual flows.
Meanwhile, traders are watching for possible supply disruptions from Russia amid ongoing Ukraine attacks on energy infrastructure and the prospect of tougher U.S. sanctions on Russian energy exports — factors that could add upward pressure on prices if they materially reduce output.
Oil prices remained mostly steady during Asian trading on Monday as investors balanced concerns over potential supply disruptions due to escalating unrest in Iran against the likelihood of more Venezuelan crude returning to the market.
As of 22:23 ET (03:23 GMT), March Brent crude futures rose slightly by 0.1% to $63.39 per barrel, while West Texas Intermediate (WTI) futures also increased by 0.1% to $59.15 per barrel. Both benchmarks had gained over 3% last week amid heightened geopolitical tensions.
Iran’s lethal protests raise fears of oil supply disruption
Markets have been closely monitoring Iran, a major oil producer in the Middle East, where widespread anti-government protests have escalated in recent days. According to rights organizations, over 500 people have died amid the unrest.
Iranian authorities have warned that U.S. military bases in the region would be targeted if Washington intervenes in support of the protesters. This threat has intensified concerns about a wider regional conflict that could disrupt oil shipments passing through the Strait of Hormuz, a critical artery for global energy supplies.
U.S. President Donald Trump adopted a tougher stance on Iran last week, declaring that the U.S. would not remain passive if Iranian forces continue harsh crackdowns on demonstrators.
“Iran, as the fourth-largest OPEC member, produces about 3.2 million barrels per day of crude oil, which represents a significant supply risk for the market,” ING analysts noted in a recent report.
Resumption of Venezuelan oil exports limits upside in oil prices
However, gains were limited by news from Venezuela, where U.S. officials indicated they might ease restrictions on the country’s oil sector. U.S. Treasury Secretary Scott Bessent said additional sanctions could be lifted as early as next week to help facilitate the sale of Venezuelan crude and support oil exports.
President Donald Trump also revealed plans for Venezuela to turn over up to 30 – 50 million barrels of previously sanctioned oil to the United States.
Despite the prospects of renewed output, major oil companies are cautious about re-entering the Venezuelan market without substantial legal and political reforms. ExxonMobil has described the country as “uninvestable” without major changes, and analysts note that firms whose assets were nationalised previously may be reluctant to return without adequate compensation.
Ankur Banerjee provides a preview of the day ahead in European and global markets. Investors remain focused on the escalating conflict between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell, who is pushing back against attempts to exert political control over the Fed and its interest rate decisions.
Meanwhile, growing turmoil in Iran—where over 500 people have reportedly been killed, according to human rights groups—adds to the geopolitical uncertainties shaping market sentiment at the start of 2026, supporting demand for safe-haven assets.
Markets opened Monday with shocking news that the Trump administration had threatened to indict Powell over his Congressional testimony last summer concerning a Fed building renovation. Powell described this as a “pretext” aimed at increasing political influence over monetary policy.
“This issue centers on whether the Fed can continue setting interest rates based on data and economic realities, or if monetary policy will instead be shaped by political pressure and intimidation,” Powell stated.
The initial market reaction saw the dollar weaken and stock futures decline, although the impact on interest rate policy remains unclear. Gold prices surged past $4,600 per ounce as investors sought refuge.
Despite the unsettling news, market responses were measured, with no signs of panic selling as investors await further clarity on the Fed’s independence and the future path of interest rates.
WASHINGTON, DC – DECEMBER 13: U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the headquarters of the Federal Reserve on December 13, 2023 in Washington, DC. The Federal Reserve announced today that interest rates will remain unchanged. (Photo by Win McNamee/Getty Images)
Markets may now generally anticipate that the Federal Reserve will yield to Trump’s influence and ease interest rates freely once a new Fed chair takes over after Powell’s term ends in May. Futures pricing currently reflects expectations of two rate cuts this year.
With Japanese markets closed on Monday, no cash trading occurred in Treasuries during Asian hours. Attention will shift to the Treasury market when London trading begins.
Key events that could impact markets on Monday include: Germany’s November current account balance and the euro zone Sentix investor confidence index for January.
Tehran has declared it will attack Israel and U.S. military bases in the region if Washington intervenes militarily to support protesters in Iran.
Speaking before the Iranian Parliament today, Speaker Mohammad Baqer Qalibaf accused the U.S. and Israel of “supporting recent riots and causing unrest” across Iran. He warned that Israel and U.S. military bases in the region would be considered “legitimate targets” if the U.S. launches any attacks against Iran.
According to Reuters, Israeli authorities are currently on high alert due to the possibility of U.S. intervention to back the protest movement in Iran.
The New York Times quoted knowledgeable U.S. officials saying that in recent days, President Donald Trump has received reports on potential military interventions in Iran as he considers acting on his threats to attack the country over accusations of “suppressing protesters.”
While Trump has not made a final decision, officials indicate he is seriously weighing the possibility of launching strikes in response to Iran’s crackdown on demonstrations. Various options have been presented to the president, including attacks on non-military sites in Tehran.
According to sources, U.S. Secretary of State Marco Rubio spoke by phone with Israeli Prime Minister Benjamin Netanyahu on January 10 to discuss the protests in Iran, the situation in Syria, and the peace agreement in Gaza. Earlier that day, Rubio posted on social media expressing U.S. support for “the brave people of Iran.”
When asked about the New York Times report, the White House referred to President Trump’s recent public statements and social media posts.
“Perhaps Iran is closer to freedom than ever before. America is ready to help,” Trump wrote on social media on January 10.
The day before, he warned of “very strong” retaliation if Iran causes protester deaths as in previous incidents. He noted the demonstrators in Iran face “extreme danger” and said the U.S. will closely monitor developments.
“Iran better not start shooting because if they do, we will shoot back,” Trump said, but emphasized this did not mean American troops would directly deploy to Iran.
The protests, which began on December 28, 2025, sparked by small traders upset over the economic situation and the falling rial, have spread in Tehran and other cities in recent days. Iranian officials accuse “terrorist agents” from Israel and the U.S. of inciting the protests and escalating violence, claims denied by the U.S. State Department, which says Tehran is “distracting attention from internal problems.”
International organizations citing local sources report that the Iranian government has blocked nationwide information flow, cut Internet access, and limited international communications, making it difficult to assess the full scope of the protests. Some human rights groups abroad report over 100 protesters have died and more than 2,000 have been arrested since late December 2025.
Iran’s Supreme Leader Ali Khamenei declared that the government will not back down before the protests, claiming that the past two weeks of unrest are caused by agitators aiming to please the U.S. leadership. He mocked Trump’s intervention warnings, urging the U.S. president to focus on domestic issues.
Iranian Judiciary Chief Gholamhossein Mohseni Ejei warned of “severe, maximum, and merciless” punishment for rioters, while the intelligence branch of the Islamic Revolutionary Guard Corps (IRGC) vowed not to allow the protests to continue.
Reflecting on the start of this century, the first striking observation is our national shortsightedness. After surviving Y2K and the dot-com crash in 2000, our leaders assumed the path ahead would be smooth sailing from year one onward.
However, reality proved otherwise, beginning with a series of black swan events, notably the attacks on the World Trade Center and Pentagon on September 11. While such events are inherently unpredictable, it’s remarkable that the Congressional Budget Office (CBO) economists confidently forecasted in 2001 a future of continuous budget surpluses, anticipating the complete elimination of national debt by 2011.
For reasons unknown, the CBO issues 10-year federal spending and revenue projections, despite having no solid factual or practical foundation to accurately forecast beyond a year or two—akin to trying to predict the weather a year in advance.
The January 2001 CBO report highlights this myopia. Their projections simply extended current trends indefinitely without grounding in reality. Under this unrealistic mandate, the CBO projected a cumulative surplus of $5.6 trillion for 2002–2011.
In reality, deficits over that decade totaled $6.1 trillion—a swing of $11.7 trillion. It would have been much simpler to just flip a plus sign to a minus. The projections failed to account for the soaring costs of Bush’s “War on Terror” post-9/11, which led to prolonged wars in Afghanistan and Iraq, the bursting of the real estate bubble, and massive TARP bailouts to rescue large banks.
In short, this is a summary of CBO’s flawed foresight:
The first takeaway from this bleak forecast is that the CBO economists assumed deficits would increase in a smooth, predictable fashion—almost as if they were drawing a straight line with minor fluctuations, rather than reflecting the unpredictable realities of economic growth.
A second point is that the 2003 Bush tax cuts were not the main driver of the deficits. In fact, annual deficits dropped significantly—from $413 billion in fiscal year 2004 (which began October 1, 2003) to just $161 billion in fiscal year 2007. This means the deficit shrank by more than half during the four years following the tax cuts and before the 2007 real estate crash.
While much of this now feels like distant history, the ongoing wars and the Federal Reserve’s drastic response to the 2008 financial crisis—keeping interest rates near zero for eight years, essentially through the entire Obama administration—contributed to massive deficits that have persisted through to today, especially in the five years following the COVID-19 pandemic.
Since 2001, U.S. federal deficits have averaged about $1 billion annually, but that figure has surged to over $2 trillion per year since 2020, according to the U.S. Treasury.
Today, the total federal deficit stands at $38 trillion, which amounts to roughly $110,000 owed per American—far from the anticipated surpluses once projected.
Following a Challenging 2000–2009, Markets Surged in the First Quarter
What about the markets? After nearly a “lost decade” lasting nine years from March 2000 to March 2009, all major market indexes have experienced remarkable growth—particularly gold relative to the U.S. dollar.
By March 9, 2009, three of the four major indexes—the S&P 500, NASDAQ, and Russell 2000—had fallen by 50% since the decade began (while the Dow was down 40%), but they bounced back strongly from 2009 through 2025:
Over the same 25-year period, the Consumer Price Index (CPI) increased by 83%, which means the real market gains were somewhat diminished.
The U.S. dollar performed even worse, losing about 10% in value overall (and 8% against the euro), while gold and silver surged more than 15 times in value:
The first-quarter returns were decent, but the strong performance of gold and silver signals that the dollar—and the CBO’s deficit forecasts—cannot be relied on in the long run. In fact, President Trump has set a goal for 2026 to deliberately weaken the dollar against the Chinese yuan to “help” exporters boost overseas sales. Much of the talk about the dominance of the “King Dollar” is just rhetoric. In reality, many politicians aim to devalue their currencies to encourage trade, turning paper money into a “race to the bottom,” while gold quietly holds its value, watching from the sidelines.
This brings us to the 2025 summary—a major victory for precious metals as the dollar dropped by 10%.
2025 Brought Massive Gains for Precious Metals
The year 2025 exemplified the key trends seen over the past 25 years—while the stock market continued to climb, gold and silver surged even faster. Although inflation is easing, gold today serves less as an inflation hedge and more as a safeguard against crises, a hedge against the dollar, and increasingly, a hedge against cryptocurrency volatility.
In 2025, the U.S. Dollar Index (DXY) dropped by 10%, allowing major global currencies to gain between 5% and 15%. Meanwhile, the poorest-performing investments of 2025 brought good news for consumers through lower food and energy prices:
So, if 2026 mirrors the gains of 2025, it will surely be a rewarding year for most investors.
TASIILAQ, GREENLAND — For decades, oil executives have eyed the Arctic as a potential source for vast petroleum reserves. U.S. government studies estimate that the region north of the Arctic Circle may contain up to 90 billion barrels of oil and nearly 1,700 trillion cubic feet of natural gas.
The amount of oil alone could meet global demand for almost three years if all other drilling activities worldwide stopped immediately.
At the heart of these ambitions lies Greenland, where some of the planet’s most extreme conditions safeguard vast reserves that have attracted prospectors hoping to find another giant oil field like Alaska’s Prudhoe Bay.
One company, March GL—set to be renamed Greenland Energy Company upon going public this year—is aiming to become a major player in the industry by tapping into billions of barrels of oil located on Jameson Land, a peninsula on Greenland’s eastern coast. This oil has the potential to significantly impact U.S. and European markets by introducing a large new supply, which could help reduce Europe’s reliance on Russian oil, currently constrained by strict sanctions due to the ongoing war in Ukraine.
In late October, Yahoo Finance joined March GL CEO and experienced oilman Robert Price, along with the company’s lead petroleum engineer, in the town of Tasiilaq on Greenland’s eastern coast. There, March GL’s contractors were preparing to store a range of heavy machinery for the winter season.
Price had planned to transport the earthmoving equipment by barge to Jameson Land, where the company intends to build a three-mile road from the coast to its inland drilling site for the initial wells. However, rough seas along the island’s eastern coast prevented the tugboat assigned to move the equipment from making the trip. By late autumn, the ice-free window for such a journey was closing too fast to wait for a replacement vessel.
As a result, March GL’s team will keep much of the machinery in Tasiilaq until spring or summer, when thawing ice will allow movement. This delay underscores the challenging and unpredictable operating conditions in Greenland.
Since that trip, the challenges around Price’s ambitions in Greenland have only grown more complex.
After Venezuelan leader Nicolás Maduro was captured and removed from power in early January, President Trump intensified his focus on Greenland. At a Jan. 4 press briefing, Trump said the United States “needs Greenland” to secure its national security interests in the Arctic, drawing strong criticism from both the Greenlandic and Danish governments.
At a White House meeting with more than a dozen major oil executives, Trump insisted that owning Greenland would be essential for defense, saying that defending leased territory is not the same as defending territory the U.S. owns. He added that the U.S. would take action on Greenland “whether they like it or not.”
In a Jan. 6 briefing to Congress, Secretary of State Marco Rubio confirmed that the U.S. was actively pursuing the option of purchasing Greenland from Denmark, and Louisiana Governor Jeff Landry—who Trump named as a special envoy to Greenland—said he intends to work toward making the territory part of the United States.
These moves have heightened diplomatic tensions, with Greenland’s leaders and Denmark pushing back against U.S. efforts and stressing that the island’s future should be decided by its people and legal processes.
Meanwhile, China and Russia have been expanding their military and maritime activities across the Arctic, putting pressure on the U.S. and Europe to boost their own defense readiness and elevating Greenland’s strategic importance. In January, a subsidiary of Russia’s state nuclear corporation shared a video on Telegram showing an icebreaker navigating the “Northern Sea Route,” which passes near Greenland and offers a significantly faster shipping route between Europe and Asia compared to the Suez Canal.
If March GL succeeds, Price’s company could establish a significant American energy foothold in the High North at a time when territorial control has become a top priority for the White House. That, however, was not originally part of Price’s plan.
Oil companies seeking to take part in newly approved exports of Venezuelan crude to the United States after the removal of President Nicolás Maduro are holding urgent talks to secure tankers and organize operations to safely transfer oil from ships and deteriorating Venezuelan ports, according to four sources familiar with the matter.
Trading firms and energy companies such as Chevron, Vitol, and Trafigura are vying for U.S. government contracts to export Venezuelan crude, the sources said, after President Donald Trump announced that Venezuela could deliver up to 50 million barrels of previously sanctioned oil to the United States.
Trafigura told the White House in a meeting on Friday that its first vessel is expected to load within the coming week.
After months under a U.S. blockade, Venezuela has been storing crude aboard tankers and has nearly exhausted its onshore storage capacity. Many of these vessels are aging, poorly maintained, and subject to sanctions. Due to insurance and liability restrictions, other ships cannot directly interact with sanctioned tankers—even if U.S. licenses are granted—sources added.
Onshore storage facilities have also suffered years of neglect, creating additional risks for companies attempting to load the oil.
Shipping firms including Maersk Tankers and American Eagle Tankers are among those seeking to expand ship-to-ship transfer operations in Venezuela, according to three of the sources.
According to one source, Maersk Tankers could reuse the ship-to-shore-to-ship logistics model it previously employed in Venezuela’s Amuay Bay. The company already operates in nearby Aruba and Curaçao, whose waters are frequently used for transferring Venezuelan oil. However, while such transfers are feasible in Aruba and at U.S. ports, they come at a higher cost.
In a statement, Maersk said its presence in Venezuela remains limited, with only 17 employees in the country. The company confirmed that all staff are safe and accounted for, and that there have been no changes to its ocean services. Operations are continuing with only minor delays, and the situation is being closely monitored.
Another shipping source noted that transfer operations will be further complicated by a shortage of smaller vessels needed to move oil from storage tankers to piers, where it can then be transferred to other ships, as well as by poorly maintained machinery and equipment.
American Eagle Tankers (AET), which already facilitates Chevron’s shipments of Venezuelan crude to the United States, is being contacted by potential customers seeking to expand its capacity in the region, two sources said.
Neither AET nor Chevron immediately responded to requests for comment.
Sources added that while exports could potentially return to the roughly 500,000 barrels per day that Venezuela shipped to the United States before sanctions—allowing stockpiles to be drawn down within 90 to 120 days—reaching that level will be difficult if crude must be sourced from both offshore tankers and onshore storage facilities.
Companies are also fiercely competing for loading slots at Venezuela’s main Jose oil terminal, where both capacity and operating speed are constrained. Chevron, a major joint-venture partner in the country, is working aggressively to maintain its preferential access to Venezuelan terminals while preparing its vessel fleet, according to one source.
Meanwhile, oil firms including Chevron, Vitol, and Trafigura are already securing supplies of much-needed naphtha, a Venezuelan industry source said. Naphtha is commonly blended with heavy Venezuelan crude to reduce its density, making it easier to transport and refine.
U.S. Treasury Secretary Scott Bessent announced that Australia and several other countries would participate in a meeting of finance ministers from the Group of Seven (G7) advanced economies, which he is hosting in Washington on Monday to address critical minerals.
Bessent mentioned that he has been advocating for this dedicated meeting on critical minerals since the G7 leaders’ summit last summer, and the finance ministers previously held a virtual session on the topic in December.
India was also invited to attend the meeting, Bessent told Reuters during a visit to Winnebago Industries’ engineering lab near Minneapolis, though he was uncertain if India had accepted the invitation.
It is not yet clear which other countries have been invited.
The G7 consists of the United States, Britain, Japan, France, Germany, Italy, Canada, and the European Union. Many members heavily rely on China for rare earth minerals. In June, the group agreed on a plan to secure supply chains and strengthen their economies.
In October, Australia signed an agreement with the U.S. to challenge China’s dominance in critical minerals, involving an $8.5 billion project pipeline and Australia’s proposed strategic reserve. This reserve will provide essential metals such as rare earths and lithium, which are vulnerable to supply disruptions.
Following this, Canberra reported interest from Europe, Japan, South Korea, and Singapore.
China currently dominates the critical minerals supply chain, refining between 47% and 87% of copper, lithium, cobalt, graphite, and rare earths, according to the International Energy Agency. These minerals are essential for defense technology, semiconductors, renewable energy components, batteries, and refining operations.
In recent years, Western countries have aimed to lessen their reliance on China’s critical minerals due to China’s implementation of stringent export restrictions on rare earth elements.
Monday’s meeting follows reports that China recently started limiting rare earth exports and powerful magnets to Japanese companies, and also banned the export of dual-use goods to the Japanese military.
Bessent noted that China continues to honor its commitments to buy U.S. soybeans and supply critical minerals to American companies.Monday’s meeting follows reports that China recently started limiting rare earth exports and powerful magnets to Japanese companies, and also banned the export of dual-use goods to the Japanese military.
Bessent noted that China continues to honor its commitments to buy U.S. soybeans and supply critical minerals to American companies.
Oil prices advanced during Asian trading on Friday, extending the previous session’s rebound as investors focused on possible supply disruptions in Russia and Iran amid geopolitical risks.
At the same time, fears of an immediate rise in Venezuelan oil output subsided after the U.S. Senate approved a measure requiring congressional authorization for further military action by President Trump.
Analysts said oil production in the country is unlikely to increase sharply in the near term, even with U.S. intervention.
Brent crude futures for March rose 0.7% to $62.44 a barrel, while WTI futures gained 0.7% to $58.03 by 21:04 ET (02:04 GMT). Both benchmarks rebounded to levels seen before last week’s U.S. military action in Venezuela after posting more than 4% gains on Thursday.
Oil prices were supported by positive inflation data from China, the world’s top oil importer, signaling a tentative economic recovery. However, gains were limited as traders remained cautious ahead of key U.S. nonfarm payrolls data that could affect interest rate expectations.
Markets focus on potential supply disruptions in Russia and Iran
Concerns about possible supply disruptions in Russia and the Middle East lent support to oil prices this week.
The conflict between Russia and Ukraine showed little sign of resolution, with ongoing military actions. A drone strike on a tanker headed to Russia in the Black Sea heightened fears of further interruptions to Russian crude supplies.
Compounding these concerns, reports indicated that U.S. President Donald Trump plans to endorse a bipartisan bill imposing even tougher restrictions on countries trading with Russia, aiming to increase pressure on Moscow to seek a ceasefire.
Meanwhile, Iraq’s government approved a move to nationalize operations at the West Qurna 2 oilfield—one of the world’s largest—in an effort to avoid supply disruptions stemming from U.S. sanctions on Russia.
In Iran, escalating nationwide anti-government protests have raised worries about potential impacts on oil production. The government responded with a countrywide internet blackout as demonstrations spread across major cities protesting the Nezam regime.
Market concerns over Venezuelan oil supply ease
Oil prices benefited from easing worries that a U.S. intervention in Venezuela would lead to a significant near-term surge in global crude supply.
Earlier this week, Trump stated that Caracas could deliver up to $3 billion worth of oil to the U.S. and indicated plans for long-term U.S. influence over the country.
However, Congress has advanced legislation that may restrict U.S. military involvement in Venezuela.
Many analysts noted that while U.S. involvement could eventually help boost Venezuelan oil production, persistent political turmoil and deteriorated infrastructure make any near‑term surge in output unlikely.
Oil prices initially plunged after the U.S. detained Venezuelan President Nicolás Maduro and signaled control over the country’s oil industry, but prices had fully recovered by Friday as markets judged immediate changes to supply to be limited.
Still, crude prices were experiencing their steepest annual decline in five years in 2025, weighed down by concerns over a widening supply glut and sluggish demand growth—an outlook echoed by major global institutions forecasting continued oversupply into 2026.
Oil prices weakened yesterday after President Trump said Venezuela would supply large volumes of sanctioned crude to the United States.
Energy
Developments in Venezuela remain in the spotlight, adding further downside pressure to oil prices. President Trump said Venezuela is prepared to sell up to 50 million barrels of sanctioned crude to the United States, a move that could also immediately weigh on Canadian crude exports to the U.S.
Such a deal would effectively open a release channel for Venezuelan oil, which has struggled to reach global markets due to a U.S. blockade on sanctioned tankers entering and leaving the country. Redirecting these barrels to the U.S. could ease storage constraints and reduce the need for Venezuela to curb production.
The U.S. Department of Energy confirmed that Venezuelan crude is already being marketed internationally, while Trump’s energy secretary stated that Washington intends to maintain long-term control over future Venezuelan oil sales. This strategy is reinforced by the continued tanker blockade, with two additional vessels reportedly seized yesterday.
Washington’s growing influence over Venezuela’s oil sector also raises uncertainty about the country’s future role within OPEC.
Meanwhile, Energy Information Administration (EIA) data showed U.S. crude inventories fell by 3.83 million barrels last week, the sharpest draw since late October. However, product balances were more bearish, as gasoline stocks rose by 7.7 million barrels and distillate inventories increased by 5.6 million barrels.
These inventory builds point to refinery utilization remaining firm, while implied demand for both products softened somewhat over the past week.
European gas prices moved higher yesterday, with TTF closing more than 2.5% up on the day. Colder conditions across parts of Europe, along with forecasts for below-average temperatures in the days ahead, are supporting the market. The current cold spell has also accelerated storage drawdowns, with EU gas inventories now at 58% of capacity, compared with a five-year average of 72%.
The latest positioning data show that investment funds cut their net short exposure in TTF for a third straight week. Funds purchased 6.2 TWh during the latest reporting period, reducing their net short position to 72.4 TWh.
Oil prices climbed during Asian trading on Thursday, regaining some losses after sharp declines triggered by worries over rising Venezuelan crude supplies.
Additionally, stronger-than-anticipated weekly declines in U.S. oil inventories supported the price recovery. Ongoing conflict between Russia and Ukraine also contributed to maintaining a risk premium in the market.
March Brent crude futures increased by 0.7% to reach $60.38 per barrel, while West Texas Intermediate (WTI) futures also gained 0.7%, settling at $56.28 per barrel as of 20:25 ET (01:25 GMT). Both benchmarks had fallen more than 1% over the previous two sessions.
Attention turns to US – Venezuela oil agreement after Trump highlights up to $3 billion in planned crude sales
Oil markets are closely watching the impact of a new agreement between the U.S. and Venezuela on global oil supplies.
U.S. President Donald Trump announced on Tuesday that Venezuela will deliver between 30 million and 50 million barrels of oil to the U.S., valued at up to $3 billion, shortly after U.S. forces detained Venezuelan President Nicolás Maduro.
Trump also appeared to encourage multiple U.S. oil companies to expand production activities in Venezuela, with Chevron Corp (NYSE: CVX) leading these efforts. According to Reuters, Chevron is negotiating to broaden its license to operate in the country.
Currently, Chevron is the only major U.S. oil company active in Venezuela, benefiting from special government exemptions that shield it from stringent sanctions imposed on the nation.
Markets are worried that a significant rise in Venezuelan oil output could further swell global supplies, adding to prevailing fears of an oil glut in 2026. Traders are already pricing in ample supply conditions, with expectations that any additional barrels from Venezuela might weigh on crude prices.
However, analysts caution that any meaningful increase in Venezuelan production is unlikely to happen quickly, given the country’s deep political instability and the extensive investment needed to rebuild its dilapidated oil infrastructure after recent upheavals.
A Financial Times report also noted that U.S. oil firms are seeking strong legal and financial guarantees from the U.S. government before committing to major investments in Venezuela’s oil sector, reflecting industry hesitancy amid uncertain policy and market conditions.
U.S. crude stockpiles decline beyond forecasts
Government data released Wednesday revealed that U.S. oil inventories fell by 3.8 million barrels in the week ending January 2, significantly exceeding expectations of a 1.2 million barrel decline.
This reduction was almost double the 1.9 million barrel draw reported the previous week, bolstering confidence that demand remains robust in the world’s largest fuel consumer.
Attention this week centers on several key U.S. economic reports, especially the December nonfarm payrolls data set to be released on Friday, which is expected to influence interest rate forecasts.
After months of rising tensions, the United States launched a major military operation in Venezuela on 3 January 2026, resulting in the capture of President Nicolás Maduro and his wife, Cilia Flores. U.S. President Donald Trump confirmed the operation, saying Washington would administer Venezuela until a stable transition government could be established. This marks one of the most dramatic U.S. interventions in Latin America in decades, with Maduro removed from power and taken into U.S. custody.
Maduro, long a focal point of U.S. sanctions and foreign policy pressure, was transported to the United States to face federal charges—such as narco‑terrorism and drug trafficking—filed in the Southern District of New York.
Venezuela holds the world’s largest proven oil reserves, and the sudden change in leadership carries significant geopolitical and economic implications well beyond its borders.
Why Did the US Capture Maduro?
Nicolás Maduro rose through the Venezuelan political system under socialist leader Hugo Chávez and became president in 2013. His time in power was widely criticized domestically and internationally, with opponents accusing him of suppressing dissent, restricting freedoms, and holding elections that lacked credibility.
Relations with Washington deteriorated sharply, especially under the Trump administration. U.S. officials accused Maduro’s government of involvement in drug trafficking and creating conditions that fueled migration toward the United States. They also branded elements of his regime—including the Cartel of the Suns—as a terrorist organization.
Tensions escalated in 2025 when the U.S. increased the bounty for Maduro’s arrest to $50 million and expanded military pressure in the region, including strikes on vessels the U.S. claimed were tied to drug smuggling.
On 3 January 2026, after months of military buildup and diplomatic pressure, U.S. forces launched a major operation in Venezuela—code‑named Operation Absolute Resolve—that resulted in the capture of Maduro and his wife. The U.S. government framed the intervention as a law‑enforcement action tied to longstanding criminal charges against Maduro, including narcoterrorism.
The United States claims that Venezuelan officials were engaged in government‑backed drug trafficking, asserting links with the so‑called Cartel of the Suns, which Washington has designated as a terrorist organization—a claim Maduro vehemently rejects. He argues that U.S. actions were aimed at forcing regime change and securing control over Venezuela’s vast oil riches.
Only hours before his detention, Maduro made his final public appearance as president when he hosted China’s special envoy, Qiu Xiaoqi, at the Miraflores Palace to discuss bilateral relations—an event that highlighted Caracas’s reliance on foreign partnerships for political support. Shortly after that meeting, explosions were reported across Caracas.
The event went beyond a simple arrest; it sent a broader strategic message, particularly to countries like China and Iran, undermining the belief that the U.S. would refrain from acting against governments supported by foreign adversaries.
Drill, Baby, Drill
A major strategic factor behind U.S. actions in Venezuela appears to be securing access to its vast energy resources. Venezuela sits on the largest proven oil reserves on the planet, with estimates from Wood Mackenzie suggesting roughly 241 billion barrels of recoverable crude, making it a uniquely significant player in global oil markets.
Top Countries by Proven Oil Reserves (Billion Barrels)
However, Venezuela’s track record of oil output underscores just how challenging it has been to tap into its vast reserves. In the late 1990s and early 2000s, the nation was capable of producing close to 3 million barrels per day—a level that made it one of the world’s top crude exporters. But political turmoil, labor strikes, and the restructuring of the oil sector under Hugo Chávez triggered a prolonged decline. The downturn was steepened further by U.S. sanctions starting in 2017, which restricted investment, technology, and exports, driving production down sharply. After bottoming out around 374,000–500,000 bpd during the worst of the crisis, output has only modestly recovered in recent years and remains in the range of approximately 800,000–900,000 bpd.
Historical Total Venezuelan Supply
Expectations that Venezuelan oil output could quickly rebound may overstate what’s realistically achievable. History shows that even after major disruptions, rebuilding oil production takes many years and vast investment. For example, Iraq needed almost a decade and well over $200 billion in capital to restore its output after the Iraq War, while Libya still has not returned to its pre‑2011 production levels.
Venezuela’s challenges are even more severe. Most of its reserves are extra‑heavy crude that demands upgrading and blending with diluents before it can be transported and refined, a costly and technical process. Years of underinvestment, international sanctions, the erosion of PDVSA’s workforce, and the deterioration of infrastructure have compounded these production hurdles. Pipelines, upgraders, and refineries have been left in poor condition, and limited access to modern technology continues to restrict any rapid recovery.
While PDVSA has claimed that facilities were not physically damaged in recent events—suggesting limited short‑term disruption—oil markets appear capable of absorbing this uncertainty for now. Inventories remain ample, and OPEC+ has signalled that its voluntary cuts of around 1.65 million bpd could be reversed if necessary to balance markets.
In a scenario where a pro‑U.S. government enables sanctions relief and attracts foreign investment, Venezuelan exports could gradually recover. But bringing production back to around 3 million bpd would take many years and substantial infrastructure upgrades. U.S. leadership has indicated that American oil companies would play a role in operating and developing Venezuela’s oil sector, though analysts note that the heavy crude’s technical challenges and investment risks remain significant.
Meanwhile, global oil markets are structurally tightening, with world consumption exceeding 101 million bpd driven by demand growth in the U.S., China, and India. Any short‑term impact on supply may show up as a modest increase in geopolitical risk premiums, but over time, the sidelined Venezuelan barrels—currently producing around 800,000–900,000 bpd—could eventually add supply and influence prices if output scales up gradually.
In addition to oil, Venezuela sits on a wealth of mineral resources. Large deposits of iron ore, bauxite, gold, nickel, copper, zinc and other metallic minerals are concentrated mainly in the southern Guayana Shield region. The country also ranks among Latin America’s largest holders of gold, and geological assessments identify significant iron and bauxite resources alongside reserves of coal, antimony, molybdenum and other base metals.
Despite this geological potential, commercial mining activity remains very limited. Most non‑oil mineral sectors contribute only a tiny fraction of Venezuela’s economic output, and substantial foreign investment has largely been absent, meaning much of the nation’s mineral wealth has yet to be developed into large‑scale production.
The Ongoing Economic Battle Between the United States and China
Competition between modern empires today is no longer about direct confrontation but about control over key inputs. Energy, metals, and critical materials form the foundation of the modern world. When leaders signal a willingness to secure these resources directly, markets should interpret this not as mere rhetoric, but as a concrete resource strategy.
The rivalry between the United States and China is fundamentally structural rather than ideological. The U.S. is rich in energy but dependent on imported metals and rare earths. China dominates metals processing but imports around 70% of its crude oil. Each side is strong where the other is vulnerable, and both seek to turn this imbalance into strategic advantage.
Control over energy flows also carries monetary implications. Influence over Venezuelan oil is not only about supply, but also about reinforcing the petrodollar and preventing the rise of the petroyuan.
There is also a regional dimension to this rivalry. China has steadily increased its presence in Latin America through infrastructure projects and commodity-backed financing. Recent U.S. moves indicate an effort to reassert dominance in the Western Hemisphere, compelling Beijing to compete on less advantageous terms. The Trump administration’s 2025 National Security Strategy elevated the region to a core priority, effectively reviving the logic of the Monroe Doctrine—rebranded as the “Donroe Doctrine.” The aim is to bring strategically important natural resources, especially critical minerals and rare earths, under U.S.-aligned corporate control while building a hemisphere-wide supply chain that reduces dependence on China.
Across much of South America, governments are edging closer to Washington, leaving Brazil increasingly isolated. This is significant given President Lula’s openly left-leaning stance and his consistent alignment with Russia, China, and Iran. Following Trump’s capture of Maduro, betting markets on Kalshi assign a 90% probability that the presidents of Colombia and Peru will be out of office before 2027. At the same time, President Trump has again stated that Greenland should become part of the United States, reinforcing a broader strategy centered on securing critical assets.
Which Assets Could Gain from “Nation Building” in Venezuela?
A political transition in Venezuela would most directly benefit assets tied to sovereign debt restructuring, energy infrastructure, and the oil supply chain.
Venezuelan bonds are currently priced at roughly 25–35 cents on the dollar, reflecting the impact of sanctions and ongoing legal uncertainty. Under a regime-change scenario, several analysts project potential recoveries in the 30–55 cent range, supported by the prospects of debt restructuring and the easing or removal of sanctions.
Ashmore continues to rank among the largest institutional holders of Venezuelan sovereign debt. Advisory firms such as Houlihan Lokey—financial adviser to the Venezuela Creditor Committee—and Lazard, a veteran of major sovereign restructurings (including Greece and Ukraine), would likely stand to gain from the sheer scale and complexity of any debt workout. In such processes, advisers typically earn success-based fees and function as the “picks and shovels” of restructuring. Venezuela’s debt structure is widely regarded as one of the most intricate ever assembled.
Reviving Venezuela’s oil industry would demand swift rehabilitation of aging infrastructure. Technip, which historically designed much of the country’s core oil facilities, is well placed to play a leading role given its proprietary expertise—particularly if emergency repairs are fast-tracked through sole-source or no-bid contracts. Graham Corporation, a supplier of vacuum ejector systems used in heavy-oil upgrading and refining, could also benefit, since Venezuela’s crude requires vacuum distillation to prevent it from solidifying into coke.
Before exports can meaningfully increase, Venezuela will need to import substantial volumes of diluent (such as naphtha or natural gasoline) to transport its heavy crude through pipelines. Targa Resources, operator of the Galena Park Marine Terminal in Houston—a major LPG and naphtha export hub—would be a natural beneficiary if Venezuela pivots back to U.S. diluent supplies, replacing current inflows from Iran.
The clearest corporate beneficiary of regime change and nation-building in Venezuela is Chevron (NYSE: CVX). Unlike other U.S. energy majors that exited the country, Chevron has maintained an on-the-ground presence. It retains the workforce, regulatory approvals (through OFAC), and operational assets—most notably Petroboscan and Petropiar—that position it to scale up production quickly. Exxon Mobil (NYSE: XOM) and ConocoPhillips (NYSE: COP), both of which hold legacy claims and arbitration awards stemming from past expropriations, could also regain market access or pursue compensation under a revised legal and political framework.
Refiners along the U.S. Gulf Coast—such as Valero Energy (NYSE: VLO), Phillips 66 (NYSE: PSX), and Marathon Petroleum (NYSE: MPC)—were purpose-built to handle heavy, sour crude like that produced in Venezuela. Since the imposition of sanctions, these companies have had to rely on costlier substitute feedstocks. A resumption of Venezuelan supply would reduce input costs and support refining margins, assuming end-product demand remains stable.
At the sector level, a significant increase in Venezuelan output would likely weigh on oil prices, which would be negative for crude producers but positive for consumer-oriented equities. Lower energy prices are inherently deflationary and could translate into lower bond yields—conditions that are generally supportive of risk assets, all else equal.
Note: This section is for analytical purposes only and does not constitute investment advice.
Venezuela: What Comes Next for the Economy and Markets?
In a characteristically Trump-like approach, President Trump initially stated that the United States would “administer” Venezuela during the transition period. U.S. officials later confirmed that approximately 15,000 troops would remain stationed in the Caribbean, with the option of further intervention if the interim authorities in Caracas failed to comply with Washington’s demands.
Venezuela’s Supreme Court subsequently named Vice President Delcy Rodríguez as interim president. A close ally of Maduro since 2018, Rodríguez previously oversaw much of the oil-dependent economy and the country’s intelligence structures, placing her firmly within the existing power framework. She signaled a willingness “to cooperate” with the Trump administration, hinting at a potentially dramatic reset in relations between the two long-hostile governments.
International observers, including the United Nations and the Carter Center, have concluded that Venezuela’s 2024 elections lacked legitimacy and fell short of international standards. Independently verified tally sheets reviewed by analysts indicated that opposition candidate Edmundo González secured around 67% of the vote, compared with roughly 30% for Maduro.
At the same time, María Corina Machado—Nobel Peace Prize laureate and a leading figure in Venezuela’s opposition—is expected to return to the country later this month and has said the opposition is ready to take power. President Trump, however, has publicly cast doubt on the breadth of her support among the Venezuelan population.
In this context, three potential scenarios appear likely, as outlined by Gavekal Research:
“Soft” Military Rule
In the near term, the most probable outcome is the continuation of the current power structure under Rodríguez and the armed forces. For this arrangement to endure, it would likely require a pragmatic shift toward U.S. priorities—embracing a more business-friendly approach and loosening ties with traditional partners such as Russia, China, and Iran. Washington may be willing to accept this scenario if it ensures political stability and reliable access to energy supplies.
Democratic Transition
A negotiated move toward civilian governance would hinge largely on how new elections are structured. Allowing participation from the Venezuelan diaspora could significantly reshape the results, whereas restricting voting to residents inside the country would be more likely to benefit factions linked to the existing regime.
“Libya Redux” (State Breakdown)
The most destabilizing scenario would involve the collapse of central authority, triggering internal military conflict and the proliferation of armed groups. Such an outcome would heighten the risk of civil strife, renewed migration pressures, and severe disruptions to oil production and global energy markets.
Oil prices tumbled in Asian trading on Wednesday after U.S. President Donald Trump said Venezuela would deliver tens of millions of barrels of crude to the United States, a development expected to significantly increase global supply. Prices were already under pressure earlier in the week, as Washington’s takeover of Venezuela fueled expectations of a broad easing of sanctions on the country’s oil sector—potentially releasing tens of millions of barrels back onto the market.
Despite elevated geopolitical risks adding a modest risk premium, oil prices stayed under pressure as markets grew increasingly concerned about a potential supply glut in 2026. Crude was already on track for its steepest annual decline in five years in 2025. Brent futures for March slid 1% to $60.11 a barrel at 20:13 ET (01:13 GMT), while U.S. benchmark WTI dropped 1.1% to $56.29 a barrel.
Venezuela to send 30–50 million barrels of crude to the United States, Trump says
In a post on social media, Trump said Venezuela would transfer between 30 and 50 million barrels of oil to the United States, with Washington planning to sell the crude at prevailing market prices. He added that the proceeds from the sales would be managed by him as U.S. president, stating that the funds would be used to serve the interests of both Venezuela and the United States.
The announcement follows just days after U.S. forces detained Venezuelan President Nicolas Maduro, when Trump said Washington was taking control of the country and planned to open up its oil sector. Oil prices initially fell after Maduro’s capture, as markets anticipated that a potential easing of U.S. sanctions on Venezuela could unleash large volumes of crude onto global markets. Trump’s actions since then suggest that this outcome is increasingly likely.
However, analysts cautioned that any reopening of Venezuela’s energy industry could take longer than expected, citing risks of political instability and the constraints of the nation’s aging infrastructure. Data from maritime analytics firm Kpler also indicated that a near-term increase in Venezuelan output is unlikely due to limited domestic storage capacity.
Russia-Ukraine ceasefire draws attention as U.S. backs security guarantees for Kyiv
Oil markets were also tracking any fresh developments in talks on a Russia–Ukraine ceasefire after the United States on Tuesday endorsed a largely European-led coalition that pledged to provide security guarantees for Kyiv.
The U.S. commitment was made at a Paris summit aimed at reassuring Ukraine in the event of a truce with Moscow. Washington also said it was prepared to help monitor and verify any ceasefire should an agreement be reached. However, Russia has so far shown limited willingness to engage in a ceasefire, with fighting between the two sides continuing as the war moves toward its fifth consecutive year.
Even so, any prospective ceasefire between Russia and Ukraine could ultimately lead to a rollback of U.S. sanctions on Moscow, allowing additional Russian oil to return to the market. Such a development would also reduce the geopolitical risk premium embedded in crude prices.
The removal of Venezuela’s current leadership would likely signal a sharp shift in Washington’s stated objectives—from a focus on counter-narcotics pressure to a far more ambitious agenda: unlocking one of the world’s largest oil reserves and reopening the country to U.S. energy companies.
“The oil business in Venezuela has been a bust—a total bust—for a long period of time,” U.S. President Donald Trump told reporters on Saturday.
“We’re going to have our very large United States oil companies—the biggest anywhere in the world—go in, spend billions of dollars, fix the badly broken oil infrastructure, and start making money for the country.”
The central question for Trump’s administration is whether political change alone would be sufficient to revive an industry hollowed out by decades of mismanagement, corruption, and chronic underinvestment.
On paper, Venezuela’s oil potential is vast. Government figures put proven reserves at more than 300 billion barrels, the largest in the world, consisting largely of heavy crude prized by refiners along the U.S. Gulf Coast and in parts of Asia.
Analysts note that this heavy crude complements U.S. shale production, which is typically lighter and less suited to certain refinery configurations. In theory, Venezuela’s reserves could once again play a meaningful role in global energy markets.
In practice, however, the obstacles are formidable. Venezuela currently produces less than one million barrels per day—a fraction of its output two decades ago. Infrastructure has deteriorated severely, skilled workers have fled the country, and oil fields, pipelines, ports, and refineries would require massive capital investment merely to restore reliable operations.
Even under optimistic scenarios, years of rebuilding would be required before production could rise meaningfully. Market conditions add another layer of complexity: global oil supplies remain ample, and prices below $60 a barrel reduce the incentive for large-scale, high-risk investment abroad.
U.S. producers must therefore weigh whether capital is better deployed in stable domestic basins rather than in a country with a long history of expropriation and contract disputes.
Legal and institutional reform would also be indispensable. Venezuela would need to overhaul laws governing private investment, restructure roughly $160 billion in sovereign and quasi-sovereign debt, and resolve outstanding arbitration claims stemming from past nationalizations.
Without clear property rights and predictable regulatory frameworks, international oil companies are unlikely to commit billions of dollars, regardless of political change.
Security and governance challenges remain unresolved as well. Removing a leader does not automatically produce stability, and companies will wait to see whether a transitional government can maintain order, protect assets, and establish credible authority across the country.
The scale of reconstruction required extends far beyond oil extraction, encompassing financing, currency stabilization, and the rebuilding of core state institutions.
In that sense, unlocking Venezuela’s oil is ultimately less a question of geology than of politics, economics, and time.
OPEC+ delegates indicated that the group is expected to keep oil production steady at their upcoming meeting on Sunday, despite ongoing political tensions between key members Saudi Arabia and the UAE, as well as the recent U.S. capture of Venezuela’s president.
The Sunday meeting involves eight OPEC+ members—Saudi Arabia, Russia, the UAE, Kazakhstan, Kuwait, Iraq, Algeria, and Oman—who together produce about half of the world’s oil supply. This session follows a challenging 2025, during which oil prices plunged over 18%, marking their steepest annual decline since 2020 amid concerns over oversupply.
From April to December 2025, these eight members raised oil output targets by roughly 2.9 million barrels per day, representing nearly 3% of global oil demand. They agreed in November to pause further output increases for January through March 2026.
According to three OPEC+ sources, Sunday’s meeting is unlikely to alter this policy.
OPEC Faces Multiple Crises Amid Market and Political Challenges
Tensions between Saudi Arabia and the UAE escalated last month over a decade-long conflict in Yemen, when a UAE-aligned group seized territory from the Saudi-backed government. This crisis sparked the biggest rift in decades between the former close allies, exposing years of divergence on key issues.
Historically, OPEC has managed to navigate serious internal disputes—such as during the Iran–Iraq War—by prioritizing market stability over political conflicts. However, the group now faces multiple challenges. Russian oil exports remain under pressure from U.S. sanctions related to the Ukraine war, while Iran grapples with widespread protests and threats of U.S. intervention.
These overlapping crises put OPEC’s cohesion and its ability to manage the global oil market to a critical test.
On Saturday, the United States reportedly captured Venezuelan President Nicolás Maduro. U.S. President Donald Trump announced that Washington would assume control of the country until a transition to a new administration can be arranged, though he did not specify how this process would be carried out.
Venezuela holds the world’s largest proven oil reserves, surpassing even those of OPEC’s leader, Saudi Arabia. However, its oil production has sharply declined over the years due to chronic mismanagement and international sanctions.
Analysts caution that a significant increase in crude output is unlikely in the near future, even if U.S. oil majors follow through on the multibillion-dollar investments promised by President Trump.
THE ETERNAL SOVEREIGN 